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Room for Growth? Residential property developers are always major beneficiaries of looser credit policies.
Photo: Andrew Vanburen

Translated by Andrew Vanburen from a Chinese-language piece in Sinafinance

WHEN SHARES LISTED in Shanghai and Shenzhen put up the world’s worst record of late, it’s only natural that experts tracking China’s stock market all expect things can only improve going forward.

Right?

Here's what eight market-watching heavyweights had to say on the matter.

China Finance Securities said that it expects the next upsurge in the benchmark index won’t lift all shares, but only those with unrealized intrinsic value.

“We’ve finally gotten above the 60-day moving average with our breaching the 2,100 level. This is nothing to sneeze at, but we fully anticipate the next mini-run will not take the bulk of counters with it.

“Therefore, we urge investors to return to scrutinizing individual counters carefully for untapped value.”

The research note said market players should be wary when the benchmark Shanghai Composite Index flirts with 2,150, as strong resistance is seen at this level.

Xiangcai Securities said that despite recent upside resistance at the 2,110 level, the upswing is still besting the 20-day moving average and the current position could be a launching pad for further additions.

“Daily turnover levels are returning to healthy levels, which may well be as much a function of pent up demand over the weeklong holiday as it is market-based buying trends,” Xiangcai said.

It added that the 2,110 level, if substantially breached, could very well be the start of a new fourth quarter partial recovery.

Dongwu Securities said the successful topping of the 60-day moving average is reason to smile, and it believes the benchmark index still has more buoyancy to display.

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Summer of Discontent: Recent China market performance



“We recommend investors hold tight their current positions and look for short-term gains in uncharted waters to spread their risk.”

But it cautioned shareholders to keep a close eye on the flurry of third quarter reports due out soon so as to make necessary adjustments ahead of the curve.

Morgan Stanley Investment Research China says there are money-making opportunities in this rising benchmark index trend market.

It added it is closely monitoring developments from the upcoming political get-together in Beijing which will ostensibly usher in a new generation of national leaders in China.

Jinzheng Consulting believes that the 60-day moving average, having been vanquished, is yesterday’s victory and more upside is in the cards.

“There is the possibility for a more rapid market recovery over the near term. We urge investors to stay upbeat and stick with the current upswing,” Jinzheng said.

Beixin Info is also sanguine on the current upswing, saying that there is more room for share price inflation.

“We see a critical level at 2,160. Non-ferrous and coal plays, given their recent volatility, will most likely play a key role in determining whether that level is sustainable or not.”

Central China Securities said it for one is keeping its eye not so much on A-share markets in Shanghai and Shenzhen, but in a city with no stock markets of its own – Beijing.

“With the upcoming political conference in Beijing and the looming leadership transition, we believe policy moves rather than market forces will be the main drivers,” the brokerage said.

Finally, China Merchants Securities said the 60-day moving average breach was a welcome development, but the market was still digesting all the downside drivers accumulated over the past nine months.

“We expect near term volatility trending toward the upside.”

See also:

BACK IN BUSINESS: PRC IPOs Break 2-Month Freeze

HOLIDAY SPIRIT: Should China Cheer End Of Break?

MARKET HOLIDAY? China Stock Trends Following Week Off

DRAWN & QUARTERED: Miserable Q3 For China Funds


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