On Wednesday in China- last night for us, there was a subway accident injuring 271 people. It happened right in Shanghai’s financial district, so the markets in china naturally sold off.
The Shanghai A shares were off .95%, and the B shares off .17%. These indexes just continue bumping along the bottom at about the lows of 2010.
In Shanghai, 13 stations slowed their trains, and Line 10 closed. Special buses were brought in by the government to move people. Rail stocks of all sorts were clobbered in both Hong Kong and China trading.
In other China news:
Senior China officials were out yesterday stating China GDP growth would hit 9% this year. Lu Ahonguyan, deputy director for the State Economic research center, said there was no need to worry about a hard landing for the Chinese economy. Lu said the global slow down will help China contain rising prices and readjust the country’s economic structure.
Allan Liu, manager of the Fidelity Southeast Asia fund, revealed his favorite consumer stock picks for China. He is extremely bullish on Baidu (BIDU), and Sina Corp (SINA)- Bidu is the China equivalent of Google- Sina is a bit more like a functional Yahoo!. He also likes Hyundai Motors and Kia Motors. Fund manager Paul Winborne of JO Hambro Capital Management likes Sun Art Retail, China Mengui Dairy, Golden Eagle, Hengan Inernational, and Baidu.
China markets were up in overnight trading, being fueled by a moderate decline in the China Manufacturers purchasing index. The Shanghai A shares were up 1.48%, and the B Shares were up .78%.
Think there’s no consumer growth in China? Think again. China Telecom reports Q2 profits rose 12% as its mobile phone subscriber base increased by 50%. The stock was up 4.8% on the news in Hong Kong.
Markets are firming up very tepidly globally on hopes the Federal Reserve will announce some sort of QE3 program to shore up the US economy.
The Chinese Purchasing Manager’s index rose slightly over July – from 49.3 to 49.8. A reading below 50 indicates contraction, but the slight improvement suggests a soft landing.
China has made investments in the production of oil in Libya. And, while China has never had a strong relationship with the nearly ousted Gaddafi, they have been supporting the rebel cause. One rebel faction warned China could lose its assets through nationalization, and the Chinese retorted with harsh words.
This weekend’s Barron’s cover article suggests it’s Time to Buy Emerging Markets after a 20% drop in China, Brazil, and India-Author Chris Williams notes their currencies are holding up against the dollar and the euro, their balance sheets are strong, and they’ve already completed their deleveraging cycle. Prices are also low as $7.7 billion came out of emerging market funds in August alone.
Barron’s also reports legendary and long term Fidelity Fund manager Mark Mobius, a pioneer of investing in China, India, and Russia, is buying up stocks that relate to consumer spending.
In overnight action, the Shanghai A shares dropped .68%, and the B shares dropped 1.8%. The B shares are typically more volatile.
Going long BIDU and selling covered calls to generate income. If you don’t understand how to generate income from your positions, sign up for the newsletter and read this past weekend’s edition.
Fan Gang- advisor to the China Central Bank monetary policy committee, in speech to 5th annual bankers conference in Beijing, says no double dip- just slower growth. He says China’s main growth driver will not be effected.
The 12th five year plan calls for reducing growth to 7%, empowering citizens to purchase more goods, raise the minimum wage, become more creative by developing industries like biotech and electric vehicles rather than simply be the world’s manufacturer, and has a major focus on reducing pollution and stabilizing the energy supply.
78% of over 500 China companies that have provided revenue and earnings forecasts for the year are forecasting both quarter over quarter growth, and year over year growth according to an article at Xinhua
China Construction Bank- one of the largest banks in China, announce Q2 profits up 31%