Photographer: Qilai Shen / Bloomberg
Photographer: Qilai Shen / Bloomberg
Chinese stocks are close to bouncing back from the highs last reached in 2015, when a bubble pushed prices up before bursting. Valuations are more reasonable this time around, and there is little sign of frenzied speculation. Instead, the country’s relative isolation from the pandemic and a global bull run are contributing to gains. The United States. The delisting of Chinese companies has little effect on domestic sentiment.
The CSI 300 Index is less than 2% below its high on June 8, 2015. The gauge is up 49% since its low in March last year, when the country shook off the grip of the coronavirus. Buying momentum is strongest since July as the index is trading 15% below its 2015 high on a price-earnings basis.
IN FOCUS
- The Shanghai Composite is also poised for a bullish breakthrough as the index pushed further above a key on Monday resistance line around 3,460 points – a level that had capped gains for the benchmark since the China stock split in July.
- FTSE Russell said it would remove three more Chinese securities from its indexes, a move widely expected after the US expanded its list of sanctioned companies. China United Network Communications, SMIC and Nanjing Panda Electronics will be dropped from Thursday, in addition to the eight companies already on the removal list.
- Beijing may require US companies doing business in China to disclose military ties, the report said state-sponsored newspaper Global Times. The report referred to the “principle of reciprocity”, citing an adviser to the Chinese securities regulator.
- The Chinese central bank may use Tuesday’s determination to signal its tolerance for the yuan rally. The spot rate rose the most in three months on Monday, widening the premium from its last fix to its highest since November.
MOVERS
- The NYSE’s decision to scrap some Chinese ADRs will “strengthen HKEX’s status as the primary listing for mainland companies,” said analysts from Citigroup, which also listed more US-listed secondary listings Chinese companies predicted. Shares of the Hong Kong exchange operator are up 68% in 2020 and Citi’s new price target of HK $ 500 implies a gain of 13%.
- WuXi Biologics’ shares could fall in Hong Kong after a shareholder agreed to sell 102 million shares for HK $ 96.50 each. That means a discount of 6.5% until the close of Monday.
- Zhongtai Cryogenic Technology is estimated to be able to relocate in Shenzhen net profit a whopping 180% in 2020.
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