Having repeatedly met with resistance around 3,300, over the past week China’s Shanghai Composite finally broke out, and overnight rose another 0.9% to 3,362.65, its highest level since December 2015, following a sharp move higher in both the Chinext small-caps index, but mostly due to a spike in Chinese broker stocks.
***
There have been various explanations for this move, with Bloomberg focusing on recent strong earnings, mostly out of China’s big caps, where recent consolidation has pushed profits and ROE higher.
Companies on MSCI’s China and Hong Kong indexes have beaten earnings estimates by the most among major emerging markets this year, underpinning rallies of 40 percent and 25 percent respectively… Profit at China Shenhua Energy Co. more than doubled in the first half as coal prices soared. Shenhua’s Hong Kong-traded shares have provided a 58 percent return to investors so far in 2017, aided by a bumper special dividend declared in March. There are plenty of other examples. In the liquor industry, Wuliangye Yiban Co. and Kweichow Moutai Co. now control more than 60 percent of the high-end market, giving them oligopoly power over retail prices. Their shares have soared 61 percent and 48 percent.
This post was published at Zero Hedge on Aug 28, 2017.
Follow on Twitter
Recent Comments