Photo: Qilu
Translated by Andrew Vanburen from a Chinese-language piece in Securities Daily
MOST BROKERAGES POLLED are quite upbeat on prospects for China shares this half, with many even expecting to see the benchmark index hit 2,600 or higher.
That would be quite a leap from the 2,170 level at present, around 20% to be more precise.
And given that the benchmark Shanghai Composite Index currently is down around a quarter from year-earlier values, that would be quite a turnaround to a rather dismal 2012 so far.
And what of this Year of the Dragon we’re currently enduring, already more than halfway finished?
The mid-year milemarker means brokerages across the region are sitting down and hammering out their postmortems on the half-year just gone by, and more importantly – making their individual forecasts for the current half.
In short, they are boldly putting their money where their mouths are and predicting where they think Chinese shares are headed over the next six months.
The good news is that most of those looking into their respective crystal balls so far are decidedly more upbeat on the current half than they were on the first six months.
That being said, three research houses stand out for their notable pessimism on the July-December period, namely: Qilu Securities, Essence Securities and Huatai Securities (SHA: 601688), all of whom are forecasting more market volatility and a continued downtrend this half.
But fortunately for everyone other than short-sale investors, most brokerages are much more upbeat on the market for the remainder of 2012.
During the mass of mid-June meetings that research houses typically hold to hammer out their 2H forecasts, it was found that the bulk were sanguine on market prospects going forward.
Among the more optimistic outlooks was that of Citic Securities which believes that the year-to-date bottom is still being sought out, but will almost certainly be reached this quarter from which a sustained climb is not only possible, but probable.
The brokerage said that once the bottom is recognized, the fourth quarter in particular could become a mini-bull in its own right.
It added that a lot of the problems worldwide dragging on sentiment, including the US economy and the upcoming elections there, as well as the debt crises plaguing much of the European Union, could be resolved in the current quarter or at least by the end of the year.
Additionally, concerns over slower growth in Mainland China and the ever-present worries of controlling inflation versus ensuring economic growth will likely be allayed going forward, all opening the door to a rush of new investor optimism and thus an upward climb for the Shanghai Composite Index.
The resolution of all these issues, or at least the clarification of strategies needed to tackle them, will likely make for a warmer upcoming winter and first half next year, as least as far as China’s capital markets are concerned.
Another leading research house sharing Citic’s upbeat outlook for the current half is Guotai Junan Securities, which is also quite sanguine on market prospects going forward.
The brokerage went so far as to say that once ongoing and proposed macroeconomic policies are in place, market watchers next year may even look back on 2012 as a whole and call the year a “bullish” one.
China Merchants Securities is also in the “upbeat” camp, adding that daily turnover will rise, lifting sentiment along with it.
But Guangfa Securities expects more volatility this half.
Despite the lack of unanimity, the consensus is that things will be getting better for China shares as the calendar year winds itself down.
This may be hard to fathom with the anemic A-share performance witnessed so far this year.
But it’s hard to argue otherwise when the bulk of experts who watch the market for a living say that they’ll be more apt to buy than sell from now until December.
See also:
Five China Sectors About To Get Hot
BUCKING TREND: China Shares Ready For Rebound?
TOUGH TALK: Dissecting China Market Fall, Fate
What’s Depressing P/Es In China?
