Stocks had a broadly positive week following a two day holiday
for Chinese markets. Technology stocks led gains on the first two
days, reversing a sectoral decline which had been occurring for
several months. Railway companies gained following an announcement
last week that infrastructure spending was being widened.
However, property shares such as
E-House China Holdings Ltd.
) suffered, driven downwards by a decline in home sales.
SouFun Holdings Ltd.
) incurred maximum losses among property stocks. A
better-than-expected increase in trade surplus has helped shares
accrue gains as of today.
Last Week's Developments
Shares listed on the Hong Kong exchange notched up gains,
avoiding a third consecutive week of losses. Higher revenue posted
by gambling stocks helped them move higher. Chinese railway stocks
also moved upwards, boosted by plans to increase infrastructure
The Hang Seng increased 0.6% last Friday, gaining 0.2% over the
week. The China Enterprises Index, comprised of the leading Chinese
listings in Hong Kong, gained 0.2% and remained flat over the week.
Markets on the mainland remained closed on Thursday and Friday
Markets and the Economy This Week
The majority of Chinese stocks moved upwards on Monday after the
two day holiday. The gains were primarily a result of a rally in
railway and technology stocks. Railway companies gained following
China Railway Corp's announcement last Thursday that it was raising
its investment budget. A decline in new home sales resulted in a
slump in property developer stocks.
Overall gains for the market ensured that the Shanghai Composite
Index gained 0.1%. The CSI 300 declined 0.1% but a gauge of
technology shares within the index moved up 0.9%. This measure had
been the worst performer among the 10 industry groups over the last
three months. The Hang Seng China Enterprises Index declined
The Shanghai Composite Index gained less than 0.1% on Tuesday,
aided by telecom and tech stocks. The index gained over four
consecutive days, increasing 1.2% overall. The CSI 300 also gained
less than 0.1%. The index's gauge of technology shares continued to
chalk up gains, increasing 1.4%, the highest among the 10 industry
However, property developers continued to suffer due to concerns
that Chinese home sales were declining. E-House China Holdings Ltd.
incurred the highest losses with ADRs declining 6.1%.
New Oriental Education & Tech Grp
) experienced the maximum losses among ADRs after Deutsche Bank AG
reduced its rating from buy to hold. Hong Kong's markets were
closed for the day. The Bloomberg China-US 55 Index lost 0.5% after
Alibaba Group Holding Ltd. filed for an IPO, which could possibly
become the largest ever in the U.S.
Markets declined on Wednesday, with the Shanghai Composite Index
losing 0.9% to close at its lowest level for the month. A decline
in the HSBC China services Purchasing Managers' Index led to
losses for property developers and consumer discretionary stocks.
Real estate website operator SouFun Holdings Ltd. dropped the most
in three years, by 9.4%. The Bloomberg China-US 55 Index declined
The CSI 300 and the Hang Seng China Enterprises Index both lost
0.9%, with the latter falling to its lowest level since March 21. A
sub-index of consumer discretionary shares within the CSI 300
declined 1.7%. Concerns that slower growth will result in a decline
in earnings has led to significant declines for the Hang Seng and
the benchmark index. The Shanghai Composite Index has declined 5%
while the Hang Seng has lost 11% this year.
An unexpected improvement in China's trade balance for the month
of April sent stocks upwards today. The benchmark Shanghai
Composite Index gained 0.3%, its largest increase in the week so
far. The 0.9% year-over-year increase in exports, exceeded
expectations while the 0.8% increase in imports fell below
This development delivered a significant boost to the economy
which has suffered from concerns over a slowdown. The trade surplus
now stands at $18.46 billion. The Hang Seng China Enterprises Index
gained 0.8% but the CSI 300 declined 0.1%. A sub-index of energy
stocks in the CSI 300 increased 1.1%, the highest among the index's
Stocks in the News
) reported loss of $1.33 per share in the first quarter of 2014,
which compared unfavorably with earnings of 60 cents reported in
the year-ago quarter.
The reported loss was, however, narrower than the Zacks
Consensus Estimate of a loss of $1.45 per share. The loss can be
attributed to a massive surge in operating expenses related to
compensation and promotional activities. Shares of the company
declined. Shares of the company declined 5.0% over last week.
Revenues jumped 18.8% year over year to $365.3 million and beat
the Zacks Consensus Estimate of $363.0 million. The year-over-year
increase was primarily driven by strong performance from online
advertising, brand advertising and search & other segments,
which more than offset the decline in revenues in the Online Games
NQ Mobile Inc.
) has reportedly collaborated with
) to allow its customers access to NQ Music Radar technology on the
HTC One M8 Harman Kardon edition smartphone.
Further, NQ Mobile's NQ live will be the default music
experience for the new handset, which will be commercially
available from this month to Sprint's customers. The new offering
will provide enhanced wireless experience, and thus prove
beneficial for new additions to Sprint's existing customer
The agreement entails integration of NQ Mobile's Music Live and
Music Radar with Sprint's Music Plus on HTC One M8 Harman Kardon
edition. The new enhancement will enable customised content and
functionality in real time. In addition, customers will also have
access to live interactive wallpaper and instant music discovery
and recognition through this latest technology enhancement.
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:
Property shares incurred heavy losses over the week, primarily
due to a slump in home sales. Private service sector numbers also
indicated that areas of weakness continue to exist in the
However, the specter of IPOs luring away funds from older stocks
has receded. At the same time, technology stocks have chalked up
significant gains, aiding the broader markets. An unexpected
improvement in trade numbers has provided strength to the markets,
quelling fears of a broader slowdown. If next week's numbers on
retail sales and industrial production also remain on the positive
side, markets may continue to chalk up gains.
Want the latest recommendations from Zacks Investment Research?
Today, you can download
7 Best Stocks for the Next 30 Days
Click to get this free report >>
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
NEW ORIENTAL ED (EDU): Free Stock Analysis
E-HOUSE CHINA (EJ): Free Stock Analysis Report
SPRINT CORP (S): Free Stock Analysis Report
SOUFUN HLDG-ADR (SFUN): Free Stock Analysis
SOHU.COM INC (SOHU): Free Stock Analysis Report
To read this article on Zacks.com click here.