Translated by Andrew Vanburen from a Chinese-language piece in Sinafinance
SWELTERING SUMMER months are notoriously slow for the real estate sector in China as the well-heeled usually take off on extended vacations and the growing middle class finds other ways to keep cool.
That matters, given the huge weighting of Mainland China’s property sector on the country’s benchmark index, the Shanghai Composite.
But the month of August has so far surprised on the upside, managing to crawl up by nearly 4%.
Is this a sign of a more august performance in store for the month of August?
Here’s what four expert market watchers have to say:
Minzu Securities said investors should pay attention to the performance of the nearly three-year old ChiNext Board, a capital-raising platform for Chinese SMEs often compared to the Nasdaq.
“Given the relative market inexperience of ChiNext listcos and their smaller capitalizations, they are more prone to volatility following macroeconomic moves from Beijing. And their investors are more susceptible to psychological over-reaction one way or another to rate action or sector controls,” the research house said.
“Therefore, we see the performance of the ChiNext as a good way to gauge wind direction of the broader market going forward.”
It added that the 2,150 mark for the benchmark Shanghai Composite should be considered a near-term base support level.
Central China Securities said there is a “perceptible” improvement in market sentiment so far this month in China.
“Economic data in July generally disappointed, which makes more stimulatory measures from Beijing all the more likely. This is the main reason for last week’s big bounceback,” the research house said.
It added that the “unreasonable worry and angst” hovering over the Shanghai and Shenzhen stock exchanges these past three months is showing obvious signs of dissipating.
“We expect an improvement in downstream manufacturing margins which will continue boosting sentiment going forward.”
Shanghai Shiji said it takes a more scientific, technical approach to the market, saying that while gauging sentiment is important, it is more reliable a strategy to look for index patterns when making predictions.
“We’re seeing a gradual upswing in the benchmark index.
“From a technical viewpoint, we’ve had four notable sell-offs since June with recoveries following shortly thereafter. This one is no different but seems to have more staying power,” the note said.
But is said it didn’t expect any notable mini-bull run anytime soon due to continued lackluster daily trading turnover numbers, which have been stuck at around 40 billion trading hands each day for a considerable spell.
China Development Bank Securities said that it continued to expect economic data and macroeconomic control measures launched by Beijing to trump actual company performance going forward.
“However, as local governments vie to spur growth of firms within their regions of influence, the net effect could be a surge in values of counters seen to directly benefit from local government support and stimuli,” the research note said.
It added that it shouldn’t surprise investors if the benchmark Shanghai Composite Index – tracker of A- and B-shares in China – were to break through the 2,500 level sooner rather than later.
The index stood at 2,168 as of end-Friday trade.
See also:
MOVING TARGETS: Setting Stable Sights On China Shares
Five China Sectors About To Get Hot
BUCKING TREND: China Shares Ready For Rebound?
TOUGH TALK: Dissecting China Market Fall, Fate
