Weekly market highlights
After the tremendous increase in first quarter, the Chinese
stock market is expected to confront a period of adjustment and stable growth.
We are still required to be aware of the policy announcement, and market forces
movement. In my opinion, there will be two industries has the potential to rise
in the next quarter.
The first area should be the bank industry. The recent
decrease on bank reservation level by 1% will drastically increase the source
of funds. Corresponding with the anticipated decrease on interest rate around
May, the stock market is going to be injected with fresh money. Since the
overall market index is predicted to rise, as the key driver in the market bank
industry can also receive benefits from this. As we know, the only remaining industry
that has average price to earnings (PE) less than 10 in Chinese stock market is
the bank industry. If an economy is going to expand, the bank is the main
force. Therefore, we should monitor the medium/small commercial banks next
week.
In addition, the real-estate market is going to be largely
affected by the reservation rate and interest rate adjustment. It is quite
obvious, because the interest on mortgage will be lower and banks are providing
more loans. In fact, the influence has already taken place in last month.
According to the statistics, the comparative growth of the real-estate market
trade was 26.4%, and this number will definitely be stimulated by the upcoming
monetary policy.
At last, the Chinese national development and reform commission
has accelerated the investment on infrastructure projects. Especially on city
environmental protection industry, the Public-Private-Partnership(PPP) was
introduced by authority as to support relevant establishment. As a consequence,
the infrastructure and environmental related stocks should draw our attention
in the next period.
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