Top China ADR Portal

China ADR stock research


Warning: strtotime(): It is not safe to rely on the system's timezone settings. You are *required* to use the date.timezone setting or the date_default_timezone_set() function. In case you used any of those methods and you are still getting this warning, you most likely misspelled the timezone identifier. We selected the timezone 'UTC' for now, but please set date.timezone to select your timezone. in /home1/chinaves/public_html/libraries/joomla/utilities/date.php on line 56

Warning: date(): It is not safe to rely on the system's timezone settings. You are *required* to use the date.timezone setting or the date_default_timezone_set() function. In case you used any of those methods and you are still getting this warning, you most likely misspelled the timezone identifier. We selected the timezone 'UTC' for now, but please set date.timezone to select your timezone. in /home1/chinaves/public_html/libraries/joomla/utilities/date.php on line 198

China stocks to watch when economy expands over 10%

E-mail Print PDF

economy3 Jan. 21, 2010 (Chinavestor) China surprised the world again - this time with a 10.7% GDP growth in the fourth quarter of 2009, +0.2% above consensus estimates. Stocks in Shanghai reacted positively for the news with financial institutions taking the lead on Thursday. The irony is that there is nobody out there who'd know for sure which sectors are gong to benefit the most - so banks outperformed. Conventional wisdom prefers financial stocks assuming they'll growth with the overall economy regardless of sector rotation. Looking at the best thirteen stocks of the SSE-50 Index on Thursday, the largest 50 companies of Shanghai Composite Index, nine are banks, three are insurance companies and one is a railway.

Name (Ticker) Change %
1 S/Pudong Development Bank (SHA:600000) +3.4
2 Huaxia Bank Co (SHA:600015) +2.9
3 Daqin Railway Co  (SHA:601006) +2.8
4 Bank of Communications (SHA:601328) +2.3
5 China Construction Bank (SHA:601939) +2.3
6 China Life Insurance (SHA:601628) +2.2
7 Industrial Bank (SHA:601166) +2.0
8 Ping An Insurance (SHA:60318) +2.0
9 China Merchants Bank (SHA:600036) +1.8
10 Industrial and Commercial Bank of China (SHA:601398) +1.8
11 China Citic Bank (SHA:601998) +1.8
12 China Mingseng Bank (SHA:600016) +1.7
13 China Pacific Insurance (SHA:601601) +1.6

So what does this mean for American investors?

 

With no Chinese financial institution listed on American stock exchanges, the best proxy for banks is the financial heavy weight iShares FTSE / Xinhua 25 Index China Fund (NYSE:FXI).

Among insurers, China Life Insurance (NYSE:LFC) has multiple listings beyond Shanghai, and is listed on the NYSE.

Taking a closer look at the latest GDP numbers the double digit grow is not just impressive on its own but is part of a broader trend - GDP has been accelerating throughout 2009.

China 2009 Quarterly GDP Growth

China_09_GDP

Source: National Bureau of Statistics

Given that the Chinese government targeted 8% GDP growth for 2009 at the height of the financial crisis, and many doubted it's possible, the 8.7% growth is extremely remarkable. Let's take a quick look what's behind such a stellar growth and what potential downside risks remain for 2010 and beyond.

China launched a RMB 4 trillion ($586 billion) stimulus package in November 2008 to encounter the global financial meltdown. Chinese export fell double digits and skeptics doubted if domestic consumption would be able to make up for steep losses in exports. And while the recovery in exports took 13 months, fixed asset investment, domestic consumption and strong retail sales helped China to achieve a V-shaped recovery.

Some of the economic highlights of 2009 in numbers:

 

  • fixed asset investment increased 30.1% in 2009 from a year earlier
  • retail sales rose 16.9%
  • number of vehicles sold reached 13 million, an increase of 45%, surpassing the U.S. for the first time. The government assisted with subsidies and tax credits
  • exports fell for a straight 13 months but started to increase in November and accelerated in December 2009
Risk to the downside:
  • housing prices soared 24% in 2009 to their highest level in 15 years. Many now fear that a property bubble is building up threatening a Japan style credit crunch
  • inflation picked up in November and December after 9 months of decline. Consumer price inflation (CPI) grew to 1.3% in November 2009 and further to 1.9% in December
  • too early exiting from stimulus

But policy makers have started to take actions to cool the economy and fight inflation. Credit tightening is already in place, banks are required to build additional cash reserve. To fight inflation China started to neutralize credit limiting certain banks to issue more loans. It's early to tell if these measures are going to be enough to keep China's economy on a sustainable development. Nevertheless 2009 goes into history books as a blockbuster ear, and not just for China stock investors.

 



If you like us, spread the word to the fellow investors on your favorite Social Bookmarking websites
Reddit! Del.icio.us! Mixx! Free and Open Source Software News Google! Live! Facebook! StumbleUpon! TwitThis Joomla Free PHP
 

!!! CHINAVESTOR.COM is for SALE !!!

BUY this domain with all its credentials. Chinavestor.com has been added to Google News and Finance since 2008! Huge web traffic upside potential! Website is optimized for Chinese stocks but can easily be tweaked. Contact Seller Here

sale1
G_news
Check out The Benefits of Getting into Google News!