Expectations that the government will take measures to boost
the economy and actual action on this front lifted Chinese
indices this week. An increase in fixed asset investment in
railways led stocks higher on Wednesday. However, a decision to
allow cross-border equity trading between Shanghai and Hong Kong
was the major positive during a holiday shortened week.
Last Week's Developments
Stocks declined for the first time in three days last Thursday
as markets ignored government measures to boost economic growth.
The State Council said that a preferential tax policy will now
encompass a larger number of small companies. Financing for the
construction of low-income housing will also be increased.
However, a decline in property developer shares weighed on
markets. Both the Shanghai Composite Index and the CSI 300
declined 0.7%. The Hang Seng China Enterprises Index moved up
0.6%. The Bloomberg China-US Equity Index dropped 0.4%.
Markets recovered on Friday, boosted by technology and
financial stocks. A gauge of tech stocks within the CSI 300
gained 2%, the largest among the 10 industry groups. Speculation
that the government will take action to step up growth and a
decline in benchmark money-market rates which lifted indexes.
All the indexes moved upwards. The Hang Seng China Enterprises
Index gained 0.2% while the CSI 300 surged 1%. The Shanghai
Composite Index increased 0.7%, cutting the year's losses to
2.7%. The Bloomberg China-US Equity Index dropped again, by
Markets and the Economy This Week
The Shanghai and Shenzhen markets were closed on Monday on
account of the Qing Ming festival, making this a holiday
shortened week. The Hang Seng Index closed 0.59% lower
after U.S. markets lost heavily despite encouraging jobs
U.S. benchmarks were dragged down by declines in momentum and
bio-tech stocks. Technology stocks listed in Hong Kong also
suffered considerable losses, taking a cue from the Nasdaq's 2.6%
loss on Friday.
Chinese indices notched up strong gains on Tuesday on
expectations that the government will take measures to boost
growth. Measures of financial and energy stocks increased more
The Shanghai Composite Index gained 1.9% following the
resumption of trading during a holiday shortened week. The CSI
300 Index gained 2.4% while the Hang Seng China Enterprises
increased 1.6%. The index of Hong Kong shares was near its
highest close achieved on January 8.
A rally in tech stocks and state media reports of an
increase in government spending on railways pushed up Chinese
stocks on Wednesday. According to a report in the state run
People's Daily, fixed asset investment target in railways was
increased to 720 billion yuan ($116.2 billion) from 700 billion
at the beginning of the year.
A measure of tech companies gained 1%, reducing its annual
loss to 4%. The Shanghai Composite Index gained 0.3%. The CSI 300
increased 0.1% while the Hang Seng China Enterprises Index moved
A decision by China to allow cross-border equity trading
between Shanghai and Hong Long led indices higher today.
Brokerages were a major force behind market gains following the
decision which will enable combined daily trading worth 23.5
billion yuan ($3.8 billion). Speaking on this new development,
Chinese Premier Li Keqiang said the linkage will result in better
integration with international markets.
The Hang Seng Index gained 1.5% while the Shanghai Composite
Index moved up 1.3%. The Hang Seng China Enterprises Index added
0.4% while the CSI 300 gained 1.6%. An unexpected decline in
exports and imports during March had sent shares lower earlier in
Stocks in the News
) Qunar unit will reportedly merge with
Ctrip.com International Ltd.
) to expand its travel search market. Shares of Ctrip surged
10.4% in after-hours trading on Tuesday. Baidu's ownership in
Qunar Cayman Islands Ltd.
) - a travel website - came through the acquisition of a majority
stake (55%) in the company for $306 million in cash.
The proposed merger could be a complete acquisition, a
partnership or just a small ownership in Ctrip.com, according to
sources. Information regarding the ownership structure, financing
methods and other details has been kept confidential.
China Petroleum and Chemical Corp.
), also known as
Goldman Sachs Group Inc
) as one of its advisors for the sale of stake in the company's
retail assets. According to reports, the sale of a 30% stake in
Sinopec's retail unit could raise as much as $30 billion.
The deal could be the biggest stake sale by a state owned
company in China. The move to sell assets comes after Premier Li
Keqiang had promised to allow private capital investment in oil
and power projects. Speaking during a conference call with
analysts last month, Sinopec's chairman Fu Chengyu said the
company's retail business was a "huge gold mine." He added that
the division's full potential "hasn't been tapped."
Daqo New Energy Corp.
) reported earnings for the fourth quarter and fiscal year 2013.
The polysilicon manufacturer is continuing its transition from
its existing production facilities in Wanzhou, Chongqing to a new
location in Shihezi, Xinjiang. Production at the Xinjiang
facility is now closer to its installed capacity of 6,150 MT per
annum, increasing to 1,445 MT, compared to 1,311 MT in the third
quarter of 2013.
Revenues have increased from $29.6 million in the third
quarter to $37 million in the fourth quarter of 2013. Revenues
have also increased from the $6.2 million reported in the fourth
quarter of 2012. Operating loss has decreased significantly to
$4.1 million, compared to $55.9 million in the same period last
Performance of Most Actively Traded US-listed Chinese
The table given below shows the price movements of 10 Chinese
companies with the highest three-month average trading volume on
U.S. exchanges. Price movements over the last five days and
during the last six months have been included.
Last 5 Day's Performance
6 month performance
Next Week's Outlook:
A decline in overall trade continues the trend of gloomy
economic data emerging out of China. Early last week, weak PMI
data had added to expectations that the government would take
affirmative action. This week's unexpectedly low trade figures
have added to the sentiment. Incidentally, the government has
already taken several measures which haveincreased market
BAIDU INC (BIDU): Free Stock Analysis Report
CTRIP.COM INTL (CTRP): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis
QUNAR CAYMN LTD (QUNR): Free Stock Analysis
CHINA PETRO&CHM (SNP): Free Stock Analysis
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