Seeking Alpha

Chinese shares end losing streak

  • Following an uncertain beginning, the Shanghai Composite has closed up 0.2% and ended a run of nine consecutive sessions of losses, its longest losing streak since 1994. The Hang Seng finished +0.6%.
  • Chinese shares rose despite another spike in short-term interest rates, which had hurt stocks last week. Even though the People's Bank of China provided a further emergency injection of money on Friday, the seven-day repurchase rate was 73 bps higher at 8.94% as of the midafternoon after touching 9.8% at one stage. That's the highest level since the liquidity crunch in June.
  • However, market watchers say that the increase in money market rates is due to seasonal factors, which might help account for the small recovery in stocks today.
  • Prior to its emergency provisions of liquidity, the PBOC had refrained from injecting money into the system as it looked - and still does - to rein in soaring debt in China. This has been highlighted by a state think tank that estimates that local-government loans have almost doubled to 19.9T yuan ($3.28T) in 2010-2012. Total central and local government debt was almost 28T yuan at the end of 2012, representing 53% of GDP.
  • ETFs: FXI, PGJ, GXC, FXP, HAO, CYB, YINN, CNY, TAO, CHIQ, CHIX, MCHI, YANG, PEK, ASHR, CQQQ, XPP, DSUM, QQQC, YAO, CHXX, CHII, KWEB, FXCH, CHXF, ECNS, CHIE, YXI, CHIM, KFYP, FCA, TCHI, CHLC, CHNA
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