China - Market Strategy 04 (Aug 18 - Jan 23)

[behappyalways]

China's "National Team" Buys Stocks For Second Time In Weeks
https://www.zerohedge.com/markets/china ... time-weeks

[winston]

UBS stays upbeat on stocks in China’s bear market as policy easing measures gain momentum

The CSI 300 Index of biggest stocks in Shanghai and Shenzhen has lost more than 20 per cent from its February 2021 peak, a technical bear market

UBS expects PBOC to lower the reserve-requirement ratio this year, among key calls on the policy front

by Zhang Shidong

A torrent of credit from local commercial banks, easier financing for home purchases and fee cuts for smaller businesses are among signals officials are treating China’s slowest growth since mid-2020 with urgency.

A combination of a power crisis, Covid-19 and debt defaults hobbled activity.

Rate increases in the US pose a major risk to assets in emerging markets, Bocom said, while credit expansion was not large enough to reduce the odds of a corporate earnings recession.

Growth companies with fair valuations and substantial declines this year could be back in favour.

Source: SCMP

https://www.scmp.com/business/markets/a ... g-measures

[winston]

Traders count on China’s ‘two sessions’ to reverse stock market decline as delegates set to endorse policy loosening to spur growth

Beijing will make stabilising growth the top priority at the upcoming NPC and CPPCC gatherings, investment banks predict

Money managers see opportunities in property developers, household appliance makers and financial firms, which stand to benefit from pro-growth measures

by Zhang Shidong

Source: SCMP

https://www.scmp.com/business/markets/a ... et-decline

[behappyalways]

Beijing Capitulates: Chinese Stocks Soar, Hong Kong Markets Jump By Most Ever After China Vows To Prop Up Markets
https://www.zerohedge.com/markets/beiji ... china-vows

[winston]

Root cause of China sell-down

by Goola Warden

On March 10, 2022, the SEC identified the first five US-listed Chinese ADRs that will be subject to forced delisting with a three-year countdown upon finalisation.

In a report dated March 14, JP Morgan says other Chinese ADRs that do not satisfy the rules could be included in the future as well following the aforementioned treatment.

Over and above this risk, institutional investors are already nervous over rising interest rates, inflation and now the Russo-Ukraine War.

Source: The Edge

https://www.theedgesingapore.com/capita ... rketreport

[winston]

STRATEGY – GREATER CHINA

What Is In The Price?

Even with the oversold rebound on 16 Mar 22, Chinese equities are still trading at an
attractive 10.9x 12-month forward PE.

We expect further legs to the rally in 2Q22, driven by easing of COVID-19 restrictions and kicking in of reflationary policies.

We recommend going long on benchmark blue chips and beneficiaries of policy easing;
sector-wise, these would be internet, commodities and renewables.

Sustained high commodity prices and further US sanctions are the key risks in 2H22.

Source: UOBKH

https://research.uobkayhian.com/content ... 8c068bb5a8

[behappyalways]

China Securities Regulator Bans Brokers From Using 'Feng Shui' To Predict Stock Market moves
https://www.zerohedge.com/markets/china ... rket-moves

[winston]

Shanghai lockdown: ‘China put’ in play as foreign funds buy Moutai, China Tourism stocks amid calls for rate cuts, fiscal boost

Foreign funds scoop up A shares, banking on official backstop, or so-called ‘China put,’ to prop up the market and sliding economy

Lockdown in Shanghai has widened to affect other tech and car-making hubs in Kunshan and TKTKT, putting Beijing’s 5.5 per cent GDP target at risk

by Zhang Shidong

Foreign investors have surprisingly been net buyers, scooping up 16.3 billion yuan (US$2.6 billion) of A-shares since March 28, according to Stock Connect data. That compares with 65.9 billion yuan of net selling in three weeks preceding the lockdown.

More tax breaks for sectors including retailing, catering and logistics could be on the cards, while direct subsidies to service-industry staff and easier financing access for developers are among possible incentives, Citic Securities said in a report.



Despite heightened concerns about earnings and growth setbacks, foreign investors have surprisingly been net buyers, scooping up 16.3 billion yuan (US$2.6 billion) of A-shares since March 28, according to Stock Connect data. That compares with 65.9 billion yuan of net selling in three weeks preceding the lockdown.
Their biggest bets during that period included the nation’s most-valuable company Kweichow Moutai, China State Construction and China Tourism Group Duty Free, according to Stock Connect data.
Covid wave paralyses Shanghai’s food deliveries
03:49

Covid wave paralyses Shanghai’s food deliveries

Covid wave paralyses Shanghai’s food deliveries
Chinese top officials including Premier Li Keqiang have pledged to support the market and deploy a variety of policy tools to aid industries hit by the pandemic. Analysts at banks including Goldman Sachs and Citic Securities predict Beijing will deliver rate cuts and fiscal spending amid doubts over its 5.5 per cent growth target for the year.
Feeling downbeat on Hong Kong stock market? Follow buy-backs as tonic for higher returns, Haitong says
9 Apr 2022

The pressure for policy response is building as the lockdown widened to Kunshan city, a nearby technology and car-producing centre in China. New daily infections in Shanghai rose to records for a ninth day on Saturday, with new cases topping 20,000.
“China’s combat against the current outbreaks may last longer than the market has priced in,” Sima Jing, China investment strategist at BCA Research in Montreal. “In the near term, the lockdowns will weigh down the effectiveness of the stimulus. In the second half of the year, the more contagious virus mutations and China’s sticking to zero-Covid strategy may lead to more frequent disruptions to business activity.”

More tax breaks for sectors including retailing, catering and logistics could be on the cards, while direct subsidies to service-industry staff and easier financing access for developers are among possible incentives, Citic Securities said in a report.

Shenwan Hongyuan Group, a Shanghai-based investment bank recommended buying into coal producers, property stocks and other cyclical companies this quarter as they stand to profit from impending pro-growth policies.

Source: SCMP

https://www.scmp.com/business/china-bus ... 855f0f13a1

[winston]

BofA: Premature to Invest in CN Equities; Corporates' Earnings Will Likely Not Improve until 1H23

Bank of America (BAC.US) published a research report, stating that, at the moment, it remains premature to invest in Chinese equities and that despite the increasingly enticing valuation, the earnings forecasts for the companies will likely continue to be reduced.

Given that China's credit cycle typically leads the gross domestic product cycle by 12 to 18 months, with the earnings trend of the companies basically in line with the nominal GDP growth, the credit growth of the country has only just bottomed, indicating that the GDP and earnings growth will likely not improve until 1H23, the report added.

Source: AAStocks Financial News

[winston]

China Urges Big Investors to Buy Stocks After Market Tumbles

Overseas investors have pulled a net 5.6 billion yuan ($868 million) from mainland shares this month after offloading 45 billion yuan in March, the largest outflow in nearly two years.

Events in 2018 suggest that the real trough may be still some way off.

Source: Bloomberg

https://finance.yahoo.com/news/china-ur ... 21908.html