Stocks have had an excellent week so far, with an economic
turnaround seeming imminent. The benchmark index gained on Monday
ahead of the release of manufacturing reports which were expected
to be on the positive side.
Stocks gained on Tuesday as well after both official and private
numbers indicated an expansion in manufacturing. The effects of
these reports spilled over into today's session as markets enjoyed
their longest winning streak in three weeks.
LightInTheBox Holding Co., Ltd.
) raised its guidance for 2Q14 while Tencent Holdings purchased a
Last Week's Developments
The benchmark index slipped on Friday, recovering from early
losses. Gains by growth sensitive metal producers negated losses by
insurance companies. Comments about the timing of a possible U.S.
rate hike by a Fed official also acted as a drag on indices. The
Hang Seng China Enterprises Index declined 0.3%.
The Shanghai Composite Index declined 0.1% while the CSI 300
moved up 0.1%. All the three IPOs which made their debut last
Thursday gained 10% each over the trading day. The Bloomberg
China-US Equity Index increased 0.3%.
The Shanghai Composite Index gained 0.5% over the week while the
CSI 300 increased 0.6%. In contrast, the Hang Seng China
Enterprises Index lost 0.9% over the week. The tech heavy ChiNext
gained 5.2%, its highest weekly gain in five weeks. This was
primarily due to the resumption of new share sales.
Markets and the Economy This Week
The benchmark index gained on Monday, ahead of manufacturing data
to be released on Tuesday which was expected to indicate that the
economy has improved. The Shanghai Composite Index increased 0.6%
over the day. The benchmark also gained 0.7% over the quarter, its
first increase since September.
A reduction in reserve-ratio requirements for certain banks has
provided a fillip to the economy. An increase in expenditure on
infrastructure to arrest a slowdown in property markets is another
stimulus measure from the government which has contributed to
markets' gains. The CSI 300 closed 0.7% higher.The Hang Seng
China Enterprises Index gained 0.3%.The Bloomberg China-US Equity
Index increased 0.2%.
The Shanghai Composite Index increased 0.1% on Tuesday, with the
majority of stocks chalking up gains. Technology and materials
stocks moved upward as the Purchasing Managers' Index touched a
six-month high of 51 for June. Meanwhile, the final reading of the
HSBC PMI also increased to 50.7 in June from 49.4 in May.
China Petroleum and Chemical Corp.
), also known as
, declined 3.2%, taking losses for the first time in six days. The
decline occurred after Sinopec revealed the rules it will use to
evaluate potential investors for its fuel retailing
The CSI 300 ended nearly flat. A sub-index of tech shares within
the CSI 300 gained 1.8%. Markets in Hong Kong were closed to mark
the anniversary of the handover of power from Great Britain to
China. The Bloomberg China-US Equity Index gained 1%.
Stocks rose for a third successive session today, marking the
longest series of gains in three weeks. Indications that the
government's efforts to combat an economic slowdown were taking
effect have fuelled this bull run. Gains were led by industrial
stocks. The effects of a significant increase in the Purchasing
Managers' Index spilled over into today's session.
The Shanghai Composite Index gained 0.4% while the CSI 300
increased 0.3%. The Hang Seng China Enterprises Index moved up 0.8%
after markets resumed trading after yesterday's holiday.
Stocks in the News
has raised its guidance for 2Q14. The online retail company now
expects net revenues of $86 million and $88 million, reflecting a
19% to 22% year-on-year increase. Previously, revenue guidance was
projected to be $84 million to $86 million. Shares of the company
surged 25% on Friday.
The company reported first quarter loss of 9 cents per share and
revenues of $81.5 million. LightInTheBox had reported revenues of
$78.8 million and loss of 12 cents per share in the year-ago
has sold a 19.9% stake in the company to Tencent Holdings. The
stake was sold for $736 million. Earlier this year, Asia's biggest
Internet company also purchased a stake in e-commerce platform
58.com will sell 36.8 million Class A and B ordinary shares to
Tencent for $20 per share. Tencent and 58.com have also named each
other as preferred partners for local services.
58.com will be able to expand its user base by tapping into WeChat
and QQ, Tencent's messaging platforms. Similarly, Tencent users
will be benefited because they will have more local services and
merchants to choose from 58.com, which offers online classified
China Unicom (Hong Kong) Ltd.
China Telecom Corp. Ltd.
) have been awarded 4G mobile network test licenses for 16 cities.
These licenses are for the FDD-LTE standard. This development was
revealed by state TV channel CCTV's microblog.
Both companies prefer the FDD-LTE standard over the domestic TD-LTE
4G standard. The licenses will enable the telecom companies to
compete more effectively with
China Mobile Ltd.
). China Mobile received licenses in December last year and prefers
the TD-LTE standard.
Yingli Green Energy Holding Co. Ltd.
) will supply 400 to 600 kilowatt (KW) of solar power to a project
that is slated to be among the largest solar energy installation
system in Brazil.
The company is teaming up with FIFA to develop the project, which
is a part of the official Corporate Social Responsibility project
of the 2014 World Cup. The company has been playing its role of
offering economically sustainable solar energy solutions to
Yingli Green is taking a step forward with the practice and intends
to offset all carbon emissions produced from its onsite sponsorship
activations in Brazil during the event. The company also obtained
carbon emissions reductions certificates for its two biomass-fueled
factories in Caatinga region of Alagoas in Brazil in an effort to
preserve the country's rich biodiversity.
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:
Government and private data has unambiguously indicated that the
Chinese economy is emerging from a slowdown. These reports also
show that stimulus measures implemented by the government have had
their desired effect. The reduction in reserve requirements for
some banks and spending on infrastructure has been potent enough to
energise the economy.
China seems to be on track to meet its growth target for the
year. Positive developments on the economic front have also negated
concerns over IPOs. On the other hand, technology stocks have
chalked up gains because of the resumption of new share sales. Next
week has several economic reports lined up. These include inflation
numbers and trade data. If these are also on the positive side, the
momentum built up this week could continue going forward.
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CHINA PETRO&CHM (SNP): Free Stock Analysis
CHINA UNICOM (CHU): Free Stock Analysis Report
CHINA MOBLE-ADR (CHL): Free Stock Analysis
YINGLI GREEN EN (YGE): Free Stock Analysis
CHINA TELCM-ADR (CHA): Free Stock Analysis
58.COM INC-ADR (WUBA): Get Free Report
LIGHTINTHEBOX-A (LITB): Free Stock Analysis
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