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Upside looks limited for Chinese stocks for the fall

Upside looks limited for Chinese stocks for the fall

September, 2013 (Chinavestor) Strong global economic data for August was not enough to keep momentum going for U.S. stocks. The Dow Jones Industrial Average (INDEXDJX:.DJI) fell 5.42% for the month, the most since May 2012. The decline is attributed to two major factors. One is a possible U.S. intervention in Syria. Some argue that once U.S. involvement takes place and uncertainty disappears the index will bounce back but we don’t necessarily buy that argument. Another factor behind the current decline is that the FED is on track to start tapering off in September. We have argued that current valuations are excessive, e.g. the Dow is at all time highs despite historically high unemployment and one of the slowest economic recoveries after a recession. The good news is that strong global, primarily Chinese, data provided support for equities globally in August. The Chinese manufacturing index showed expansion along with sound factory orders. The Shanghai Composite Index (SHA:000001) rose 3.4%, the most since January 2013, making up for previous losses earlier the year. But investors in Hong Kong kept a close eye on the U.S., mitigating positive developments from China. All told the Hang Seng Index (INDEXHANGSENG:.HSI) fell 0.5% in August and is down –4.1% year-to-date (YTD). This is far better than the 7.5% decline for the Shanghai Composite or the –7.8% for the China ADR Index. This latter one is compiled by Chinavestor and takes into account all Chinese ADRs listed in the United States.

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Hot China Stocks

It’s all about the FED

It’s all about the FED August, 2013 (Chinavestor) July was another month for the record books. While stocks ended the month mixed, the overall picture is clear: broad FED instilled rally. The Dow Jones Industrial Average (...
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Hot China Stocks

Embrace Volatility for Rest of 2013

Embrace Volatility for Rest of 2013 July 2013 (Chinavestor) We argued that high risk had yielded high return in 2013 so far in our last Newsletter, but that is about to change in our view. We are uncertain about the speed of change but...
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Hot China Stocks

High Risk Yields High Return So Far

High Risk Yields High Return So Far June 2013 (Chinavestor) Abundance of money flows continued to drive equity markets world wide for the month of May. With no change in policy for the short term, we expect current trends to continue i...
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Hot China Stocks

Liquidity risk is on the rise for Chinese ADRs

Liquidity risk is on the rise for Chinese ADRs May 2013 (Chinavestor) The month of April continued where March left off: surging U.S. equities and falling Chinese counterparts. In fact, the Dow Jones Industrial Average (INDEXDJX:.DJI) and the S&a...
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