Susan Weerts'  Instablog

Shanghai composite reclaimed 3,000, a psychological point, on slightly higher volume on Monday. It broke the 30-day moving average. Shanghai and Shenzhen index rose 2.39% and 1.24% respective. However, the heavy weights lagged behind, Industrial and Commercial Bank, Shanghai Pudong Development Bank, Sinopec(SNP) down slightly while China Petroleum (PTR), Bank of Communications, China Merchant Bank, Ping An, CITIC Securities, and Baoshan Steel only up marginally. Small cap outperformed. Financial, Steel, petroleum and real estate lost the stream.

In the preparation of the 60^th anniversary of National Day October 1, the Chinese government turned into a celebration mode. The somber warnings several weeks ago, such as from Premier Wen , were replaced by the upbeating rhetorics. It is generally politically charged during the even-number anniversary. The 17^th CPC central Committee Political Bureau will hold its fourth session tomorrow from Sept. 15 to 18. The market expects more positive rhetorics. The Chinese stock markets are affected largely by the political environment instead of the fundamentals. After the positive political rhetorics and macro data pushed the market above 3,000, what next? Eight brokerage houses in China gave their outlooks on the post-3000.

Guo-yuan Securities

The leading indicators continued showing the signs of improvement. Electricity generating capacity rose 4 consecutive months and total electricity consumption in January to August turned positive for the first time. The better than expectation macro data gave the market a boost. The market will likely keep its upward momentum. The promise of stable policies will keep the market intact in the intermediate/long term.

However, the broad market rally were not with its worries.

1. The inflation expectations continue looming in connection with higher housing sales prices, food and fuel costs.

2. In spite of the strong rebound, the trading volume remained to be low. Lack of trading volume makes it difficult achieve any new highs. In addition, the recent doji itself might indict a possible reversal.

3. Several heavyweights were expected further second/third public offerings and unlocked shares in the 4^th quarter. (see: New offerings and Unlocked Shares continues pressure on China Stock Market ). The new shares will put the pressures on the market.

4. From the external market point view, the dollar instability, housing default rates and credit issues will likely to lead to international market turbulence, which might spill over into the chinese market.

Guoyuan believed that the market will be within the 2800-3200 in September. A head-shoulder pattern was formed in the recent rebound. Guoyuan recommended to buy in when the market enters in the right shoulder construction. Guoyuan recommended to buy in the beat-down individual financial stocks when the market turns. They advise the investors to dug into the opportunities in automobile, building materials, and auto parts. They recommended the investors to increase their holdings on medicine, agriculture, electrical equipment, new energy, retail, environmental and communication, following the food steps of institutional investors. Guoyuan thinks the investors better benefited through the short term trading in current environment.

Ternary Consultant

On September 14 , Audit Commission ordered the second auditions on three major banks to determine where the stimulus money was illegally flowing into the stock and real estate market. It is likely to cause the money outflows from the stock market to cope with the audition.

Ternary recommended the investors to actively manage their positions, by selling the stocks with the most recent running ups. They recommended the venture capital, environment, and automobile. State Council implemented new policies to revitalize the industries in the Northeast. They suggested the investors to looks into the aerospace, electronic information, biomedicine, and new materials, with focus on new energy and low-carbon economy-related stocks.

 

Despite the market was closed above 3,000, the market didn't fill its 3040 gap. The market is likely to head to 3100 if the gap is filled. It remains to be seen whether the market could hold on the 3000 marks if not. IT, paper and venture capital led the market on Monday. However, the heavyweights were under the pressure, especially the real estates after the reports showed that the housing sales volumes of Merchant banks, Forte, Vanke dropped 48%, 17% and 16% respetively. 

 

National Cheng Investment

The market has gained 380 points since the beginning of the month. The positive macro data pushed the market over the psychological 3000. The market currently looks for substantial positive government policies directly aimed to the stock market. Lack of concrete policies might result in contractions. The pressure came from 60-day moving average and 3040 gap. The market is likely to oscillate around 3000. National Cheng advised the investors to be cautious , not chasing the market. They recommended the investors to buy the inflation-fighting stocks on the dip.

 

 

Morgan Stanley

 

 

The broad market has formed a V-shape bounce. Morgan Stanley expected the market continue consolidating and regrouping, which will provide a base for next stage of upwards movement.

 

Morgan Stanley continue recommending Medicine and venture capital. Now it adds the paper industry into its conviction lists.

 

Chinese Securities Investment

The market faces the 60day moving average and 3050 resistances. The recent low volumes indicted a possible short term reversal and an increase in stock volatility. They advise the investors to remain cautious. They recommend two recent IPO stocks, JingYi Metal Co. (002295) and Brilliant Science and Technology (002296).

 

 

IXZQ Securities

There were active section rotations recently. Brokerage stocks remain strong. Recent interests expressed by fund managers gives rise of short term trading opportunities on Vaccine and venture capital stocks. However, the investors need to stay nimble given its likely plunge after the run up once the volume drops. Overall, the positive macro data showed continuing improvement and investors remains relatively optimistic. The market will continue outperform. They recommend financial and real estates

Disclosure: no position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Soochow Securities

The section rotation showed signs of fatigue. More intraday trades were initiated by sell-side. The daily K line indicted that the market will meet its resistance somewhere between 3080-3100. There are lower probabilities for the market to break through this regions on this round of re-bounce. The market will likely to consolidate in a lower region before any break out.

 

In a short term point of view, 60 minute K line continue trending up. It is time to lock in some short term profits once the market fill the 3046 gap.

 

Soochow continue recommending Financial and Insurance. In the short term, It recommends investors to pick up some retail, tourism related to the incoming celebration of October 1.

 

Shanghai JinHui