Skip to main content

Views On Chinese Equities


  • Feb 24: After rising by 1/3 in early 2009, Shanghai Composite equities pared their gains to 20% as global and Chinese outlook worsened.
  • Many of the new loans extended in December and January may have found their way into the equity market as investors seek better return on assets, this could imply that the lending surge is not being invested in sectors that will boost growth- and that stock market gains are vulnerable especially given that chinese equity returns have become more correlated with global trends
  • Shenzhen equities rose 38% (Feb 16). The CSI fell 65% in 2008 as worsening global outlook, higher costs squeezing corporate profits, falling bank profits and government intervention are weighing on equities.
  • Shanghai Composite Index, rose 9.3% in January, including three weekly gains before closing for the new year holiday. The Chinese equity market has rebounded since fiscal stimulus was announced in November 2008.
  • Index may head towards the 200-day moving average at 2578 before a pullback. After the completion of a pullback, the index is expected to approach 2850 or 0.236x retracement level of the decline from the peak of 6429 (UOBKH)
  • Citi: telecom and energy sectors may underperform, while highly geared companies, like financials, are likely to outperform Yet margin contraction, rising credit costs and decelerating fee income momentum will create downside risks for banks
  • Policy responses
  • The government will ban cross-border fund flows, push publicly-traded companies to return more money to investors and toughen rules to punish insider trading
  • China's cabinet approved a trial program for margin trading and short-selling even as other countries have imposed curbs on short selling. Shorting stocks could allow investors to hedge exposures but could be more destabilizing in the short-term
  • China may allow investors to sell bonds that can be swapped for shares and may use brokerages as intermediaries to sell their shares rather than secondary market to ease pressure on share prices
  • The Chinese equity market continues to be speculative because hedging tools are limited (deterring institutional investors) information on the companies is limited (Pettis) Level of government meddling in the market makes true transparency difficult (Hewitt) Many retail investors (who led the boom in 2007) have retreated to demand deposits
  • Volume: Shares worth an average 118 billion yuan ($17 billion) changed hands every day on the Shanghai and Shenzhen stock exchanges early in 2008, 38% less than in 2007 (Bloomberg)
  • Credit Suisse: the four most undervalued sectors are energy, materials, real estate. Consumer staples are relatively overbought
  • Chinese equities may now be more susceptible to global outlook good or bad despite limited foreign investment in mainland equities. But it has also been driven by factors particular to China including previously high valuations, worries that anti-inflation measures would crimp growth
  • Anderson: A-share capitalization now equals 40% of Chinese financial assets, a similar ratio to other markets
  • In 2007. China's market capitalization $4.48 trillion or 140% of GDP. Average trading volume $26b. Chinese companies raised $62b in domestic market IPOs (WB) Shanghai index rose over 80% in 2007, smaller Shenzhen rose 120% in 2007 as limited investments, tax policies, RMB appreciation, negative deposit rates fueled share price boom
p/s photo: Natalie Tong Sze Wing

Comments

Arn said…
http://research.stlouisfed.org/fred2/fredgraph?s[1][id]=AMBNS

Question: Sharp spike in money supply = impending hyper-inflation?

Popular posts from this blog

My Master, A National Treasure

REPOST:  Its been more than two years since I posted on my sifu. This is probably the most significant posting I had done thus far that does not involve business or politics. My circle of close friends and business colleagues have benefited significantly from his treatment.


My Master, Dr. Law Chin Han (from my iPhone)

Where shall I start? OK, just based on real life experiences of those who are close to me. The entire Tong family (Bukit Kiara Properties) absolutely swear that he is the master of masters when it comes to acupuncture (and dentistry as well). To me, you can probably find many great dentists, but to find a real Master in acupuncture, thats a whole different ballgame.


I am not big aficionado of Chinese medicine or acupuncture initially. I guess you have to go through the whole shebang to appreciate the real life changing effects from a master.


My business partner and very close friend went to him after 15 years of persistent gout problem, he will get his heavy attacks at least…

PUC - An Assessment

PUC has tried to reinvent itself following the untimely passing of its founder last year. His younger brother, who was highly successful in his own right, was running Pictureworks in a number of countries in Asia.

The Shares Price Rise & Possible Catalysts

Share price has broken its all time high comfortably. The rise has been steady and not at all volatile, accompanied by steady volume, which would indicate longer term investors and some funds already accumulating nd not selling back to the market.


Potential Catalyst #1

The just launched Presto app. Tried it and went to the briefing. Its a game changer for PUC for sure. They have already indicated that the e-wallet will be launched only in 1Q2018. Now what is Presto, why Presto. Its very much like Lazada or eBay or Alibaba. Lazada is a platform for retailers to sell, full stop. eBay is more for the personal one man operations. Alibaba is more for wholesalers and distributors.

Presto links retailers/f&b/services originators with en…

How Long Will The Bull Lasts For Malaysia

Are we in a bull run? Of course we are. Not to labour the point but I highlighted the start of the bull run back in January this year... and got a lot of naysayers but never mind:






























p/s: needless to say, this is Jing Tian ... beautiful face and a certain kind of freshness in her looks and acting career thus far



http://malaysiafinance.blogspot.my/2016/12/bank-negara-may-have-switched-on-bull.html


I would like to extend my prediction that the bull run for Bursa stocks should continue to run well till the end of the year. What we are seeing for the past 3 weeks was a general lull where volume suddenly shrunk but the general trend is still intact. My reasons for saying so:

a) the overall equity markets globally will be supported by a benign recovery complemented by a timid approach to raising rates by most central banks

b) thanks to a drastic bear run for most commodities, and to a lesser extent some oil & gas players, the undertone for "cost of materials" have been weak and has pr…