China has World-Beating Stocks in January
The world’s largest money managers say China’s steepest monthly stock gain in more than a year shows the fastest-growing major economy will avert a recession.
The Shanghai Composite Index, the broadest measure of shares traded on the mainland, rose to the highest in more than a month today after a weeklong Lunar New Year celebration. The gauge advanced 9.3 percent in January, the most among the world’s 10 biggest markets. The index fell 65 percent last year, the worst since at least 1996, data compiled by Bloomberg showed.
Chinese shares rebounded after the central bank lowered interest rates five times since September and the government announced a $584 billion stimulus plan. China’s economy is expected to grow near 8 percent this year even after expanding 6.8 percent in the fourth quarter, the slowest pace since December 2001.
China is going to do what it has to do to keep the economy humming, because of the deep pocket, it can enjoy faster growth than the rest of the world in 2009 and in 2010 as well. So far, China has pressured state-owned banks to increase lending, unveiled the 4 trillion yuan ($584 billion) stimulus package, reduced export taxes and agreed to provide support for 10 industries, through tax cuts and subsidies for steel and autos.
China is considering additional measures to help prevent a slump in economic growth, according to the Financial Times reported today, citing an interview with Premier Wen Jiabao.
Chinese stocks are trading at less than one-third of their peak valuation in January 2008. The Shanghai Composite Index is valued at 15.6 times reported earnings, down from a six-year high of 50 times a year ago. That’s still the highest among benchmark indexes in Asia.
2009 will be a difficult year for stocks. Government stimulus measures are unlikely to offset a contraction in private real estate investment and capital investment for export corporate. China stocks are most likely to be “range-bound” in 2009. Remember the government’s purpose is market stabilization, not market rebound back to the peak.
The Shanghai Composite Index, the broadest measure of shares traded on the mainland, rose to the highest in more than a month today after a weeklong Lunar New Year celebration. The gauge advanced 9.3 percent in January, the most among the world’s 10 biggest markets. The index fell 65 percent last year, the worst since at least 1996, data compiled by Bloomberg showed.
Chinese shares rebounded after the central bank lowered interest rates five times since September and the government announced a $584 billion stimulus plan. China’s economy is expected to grow near 8 percent this year even after expanding 6.8 percent in the fourth quarter, the slowest pace since December 2001.
China is going to do what it has to do to keep the economy humming, because of the deep pocket, it can enjoy faster growth than the rest of the world in 2009 and in 2010 as well. So far, China has pressured state-owned banks to increase lending, unveiled the 4 trillion yuan ($584 billion) stimulus package, reduced export taxes and agreed to provide support for 10 industries, through tax cuts and subsidies for steel and autos.
China is considering additional measures to help prevent a slump in economic growth, according to the Financial Times reported today, citing an interview with Premier Wen Jiabao.
Chinese stocks are trading at less than one-third of their peak valuation in January 2008. The Shanghai Composite Index is valued at 15.6 times reported earnings, down from a six-year high of 50 times a year ago. That’s still the highest among benchmark indexes in Asia.
2009 will be a difficult year for stocks. Government stimulus measures are unlikely to offset a contraction in private real estate investment and capital investment for export corporate. China stocks are most likely to be “range-bound” in 2009. Remember the government’s purpose is market stabilization, not market rebound back to the peak.
Labels: china
posted by Jiu Zhuang at
4:42 PM
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