US-listed China stocks pushed higher on Monday, sending the PowerShares Golden Dragon ETF up about +1.4% on the day, its fifth consecutive daily gain, which has seen shares move higher by about +5%. The index has been in rally mode since mid-March, rising more than +25% on a nearly non-stop pace. Technicians may note that China stocks traded in the US look overbought (RSI at 82, well over 70, which is the traditional “too hot” indication), but it has been stubbornly in overbought since early April. Does the rally in US-listed China names look set to fall? Maybe not, due…
The HSBC/Markit Flash China Manufacturing PMI was 49.2 for April 2015, which was lower than the final reading of 49.6 in March, and expectations of 49.6, and a 12-month low. April’s reading suggests future contraction for the manufacturing sector, which has historically contributed about 30% of China’s GDP, and was the fourth month in the last six that showed weakening conditions (under the breakeven reading of 50). {mprestriction ids="1,2,3"} Looking at the key sub-indexes, new orders fell further and at a faster pace than last month, however new export orders moved to expansion territory from contraction last month. Employment continued…
Official home price survey data for China’s largest 70 cities delivered some positive results in March 2015, for anyone willing to look beyond the media-favorite YoY data points. It’s true that broadly speaking, prices were lower than a year ago, down -6.1% YoY for new homes and -5.2% YoY for existing homes, levels which hit new lows in the pricing correction which began in May 2014. And although it’s a great doomsday headline (think “prices plummet -6.1% YoY!”), a closer look at the monthly data actually has some positive takeaways. {mprestriction ids="1,2,3"} According to the NBS, prices for both new…
Wednesday, 15 April 2015 00:00

Eco data - Q1 2015 GDP

Official GDP data from China’s National Bureau of Statistics showed that growth in the country’s economy met the government’s target of +7% YoY in Q1 (source, Chinese). China’s primary industry (agriculture, forestry, animal husbandry, etc.) grew +3.2% YoY, whereas the secondary industry (which includes mining, manufacturing, etc.) was higher +6.4% YoY, and the tertiary industry (everything else) grew +7.6% YoY.     Key data points from the release were as follows: {mprestriction ids="1,2"} Expected production areas for key foodstuffs increased YoY; rice +0.2%, wheat +0.7%, and corn +1.9%. Meat production was down -1.2% YoY (pork, a key food item and…
Friday, 10 April 2015 00:00

Eco data - Inflation data for March 2015

In a welcome contrast to last month, both consumer and producer price indexed in China showed improvement in March 2015. The CPI reading was up +1.4% YoY, which was flat vs. last month and higher than the market’s expectation of +1.3%. The March reading for PPI was -4.6% YoY, which although still negative, was stronger than the -4.8% YoY market expectation. {mprestriction ids="1,2,3"} Although the headline number was better than expected, stripping out food prices points to conditions which are still weak on the consumer front. Food prices rose +2.3% YoY, while non-food prices were up a weak +0.9% YoY,…
Seeing China Finance Online (JRJC, profile) head higher over +40% in the last few sessions is mind boggling and illustrate how far away from fundamentals US-listed Chinese microcaps can really trade. The domestic markets have been on a tear recently (A-shares have rallied over +20% in the last month), perhaps a reason that some investors are punting on JRJC, however this thesis will not end well for anyone trying to take a longer view on the stock. {mprestriction ids="1,2,3"} The company does not have much exposure to domestic Chinese stock markets (its biggest segment has been its Precious Metals Trading,…
Thursday, 09 April 2015 00:00

HK again higher, Shanghai cools on Thursday

Trading in Hong Kong was again the standout on Thursday, with the HSI rising +2.7% with strong volume while the Shanghai Composite shed nearly 1%. The main catalyst behind Hong Kong’s move up was again fund flows coming in from Mainland China; the 10.5 billion RMB southbound trading quota for the Shanghai-Hong Kong Connect was used up before 1:45 PM. Sectors higher in Hong Kong were again financial names (surprised?). Banks and Insurers bot rose +2%, and Property Developers also edged higher with gains just under 2%. E-commerce reversed from recent strength, falling over -1%, with leader Tencent up a…
Hong Kong stocks staged a major rally on Wednesday, with cross-border buyers from Mainland China exhausting the quota by about 2:00. The market gapped up on the open and by the end of the day, the HSI was up +3.8% on very heavy volume. Hong Kong saw about 250 billion HKD of turnover during the day, more than double the trailing monthly average of about 94 billion HKD. E-commerce and Internet names were the leaders in HK trade, with Tencent rising about +3% and e-commerce player CogoBuy up +30% while NetDragon was higher +35%. Recent regulatory changes in Mainland China…
From the “are you kidding me” files – the Shanghai Composite added over +2.5% in Tuesday trading following the three-day weekend. Hong Kong was closed for the day. Shanghai saw a surge in volume, with about 746 billion RMB of shares traded during the day, up well over the recent monthly average of about 560 billion RMB, and the fourth consecutive session of gains. Trading today showed no signs of stopping the rally, with shares ending on session highs. Today’s gain in Shanghai saw the index push further into overbought territory (RSI about 83 using default settings), and stretched the…
Tuesday, 07 April 2015 00:00

US-listed China stocks push higher Monday

China stocks listed in the US played catch-up on Monday, after markets were closed for Friday and there was no trading in Hong Kong and Mainland China due to the Qingming Holiday on Monday. Notable moves on the day were Xueda Education (XUE, +16.3%), Qunar (QUNR, +7.0%), Bona Film Group (BONA, +6.9%), Cheetah Mobile (CMCM, +6.0%), China Finance Online (JRJC, +5.7%), Tuniu Holdings (TOUR, +5.7%), and Soufun Holdings (SFUN, +5.5%). Xueda moved higher absent any news from the company. Monday’s pop may be terribly surprising considering that it trades relatively cheaply (12.6 P/E, and beneath cash) and recently announced a…
Thursday, 02 April 2015 00:00

Hong Kong and Shanghai up on Thursday

Trading in Hong Kong and Mainland China advanced again on Thursday, with the HSI rising +0.8% and the Shanghai Composite adding +0.4% in see-saw trading which saw the index slide as much as -1% intraday before closing higher. Turnover and volume was decent in both markets. A total of nearly 125 billion HKD traded in Hong Kong (higher than the average of about 90 billion HKD over the past month). In Shanghai, total trading was about 632 billion RMB, also stronger than the trailing monthly average of about $533 billion RMB. Stocks leading Hong Kong higher included technology  and electrical…
Thursday, 02 April 2015 00:00

500.com (WBAI) - rating suspended

Rumors circulating Thursday in mainland China that online lottery sales would be resumed “soon” are likely a welcome relief for investors in the battered, but not broken, 500.com (WBAI, profile). The stock has seen wild trading for about the past month or so, due in part due to a near…
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