Mario Marciano on China Stocks to Watch
Heavy weakness in Chinese names
We are seeing widespread and meaningful weakness in Chinese companies today on continued weakness out of Asia. China’s Shanghai Composite only fell 1.3% overnight, but many shares were halted there, which may have reduced the downside volatility. An increasing number of companies in Asia have been halting their own shares to limit the downside during the continued sell off.
Chinese shares fell into negative territory on Tuesday after Monday’s uptick as government support measures failed to reverse the losing streak.
The benchmark Shanghai Composite Index edged down 1.29 percent to finish at 3,727.13 points.
The Shenzhen Component Index slumped 5.8 percent to close at 11,375.6 points.
The ChiNext Index, tracking China’s Nasdaq-style board of growth enterprises, plunged 5.69 percent to end at 2,352.01 points.
Combined turnover of the two bourses shrank to 1.08 trillion yuan (176.47 billion U.S. dollars) from 1.55 trillion yuan the previous trading day.
Losers outnumbered winners by 819 to 55 in Shanghai, and by 1,109 to 25 in Shenzhen. More than 1,700 shares on the two bourses dived by the daily limit of 10 percent.
A total of 750 of the roughly 2,800 companies listed in Shanghai and Shenzhen had filed for a trading halt by the close on Tuesday to avoid further losses.
Shares fell across the board in most industries, with utilities, steel and Internet finance leading the losses. Nanjing Iron & Steel plunged by the daily limit of 10 percent to end at 3.93 yuan per share.
Gains were focused on blue chips, the explicit target of the stabilization fund, particularly the big banks, with China Citic Bank Corporation surging by the daily limit of 10 percent to end at 9.1 yuan.
To arrest the further slump of the Shanghai Composite Index, which has tumbled by nearly 30 percent since a peak on June 12, the government has rolled out a raft of stimulus measures, including moves to pour funds and restrictions on futures trading on a major small-cap index.
Datong Securities said reversing the downward trend will take time as investors regain confidence.
According to a research report from Shenwan Hongyuan Securities, the Shanghai Composite Index will continue to rise and fall in the coming three months between 3,600 points and 4,500 points.
A daily trading limit for the CSI 500 index will be effective from Tuesday, the latest action by China’s financial regulators to prevent more losses.
China Financial Futures Exchange (CFFEX) said Monday night that it would limit investors’ daily purchases of CSI 500 index futures to 1,200 lots for rise and fall.
CFFEX added that it would step up efforts to investigate illegal market activities.
The stock market showed signs of stabilization on Monday after being stuck in the doldrums for three weeks. The benchmark Shanghai Composite Index advanced 2.41 percent to finish at 3,775.91 points.
A raft of supportive measures introduced during the weekend was behind Monday’s rise.
Twenty-one major securities brokers promised to spend no less than 120 billion yuan (19.62 billion U.S. dollars) on exchange traded funds (ETF) that track the performance of blue chip stocks.
Twenty-eight Chinese companies, which had obtained permission for IPO, announced they would postpone share issuance.
Central Huijin Investment Co., the investment arm of the central government, announced it had purchased ETFs and would continue to do so.
China Securities Finance Co.(CSF) said it would raise funds through multiple channels and expand its business scale to help stabilize the market. The central bank also committed to providing liquidity to CSF.
· Some of the most meaningful underperformers include: WBAI -24.14% STV -20.60% JMEI -19.31% BITA -18.09% BZUN -17.17% SFUN -17.25% EJ -16.72% ACH -15.81% DANG -15.18% QUNR -14.25% NOAH -13.75% NQ -13.72% DSKY -13.52% WUBA -13.24% KNDI -12.92% JRJC -11.14% CCIH -11.93% SOHU -11.61%CMCM -11.68% NTES -11.49% CTRP -11.42% TEDU -11.41% XNET -11.36% ATHM -11.08% KANG -10.59% MY -10.24% CYOU -10.39% CMGE -10.23% YOKU -10.15% QIHU -10.22% YY -9.99% AMCN -9.78% WB -9.87% JD -9.39% JD -9.39% KGJI -9.41% VIMC -9.39% VNET -9.37% TOUR -9.27% XUE -9.22% RENN-8.89% TSL -8.21% FENG -8.12% SINA -7.84% LEJU -7.65% JKS -6.67% XRS -6.54% LFC -6.50% MR -6.11% WX -5.90% KZ -5.85% GAME -5.76% YGE -5.61% ZPIN -5.29% CHU -5.18% JASO -5.13% BONA -5.05% PWRD -4.51% BIDU -4.49% BABA -4.18% CHL -3.86%
The post Mario Marciano on China Stocks to Watch appeared first on Live Trading News.