4/27/15

Day 125 Weekly market highlights

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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