China Economic Scan Weekly Stockmarket Review

Chinese stocks closed up week on week with theShenzhen Component leading up +5.31% at 10,667, the Shanghai Composite up+4.59%, and the Hang Seng up +2.80% to 18,680, the TAIEX however slipped –1.79%to 6,767.

Chinese stocks closed up week on week with theShenzhen Component leading up +5.31% at 10,667, the Shanghai Composite up+4.59%, and the Hang Seng up +2.80% to 18,680, the TAIEX however slipped –1.79%to 6,767. Chinese stocks faced a couple of ratings changes from the investmentbanks last week.

 

Chinese stocks were upgraded to “neutral” at MorganStanley, which said the growth in liquidity globally is boosting asset prices.“A mini asset-economy upcycle, courtesy of aggressive policy-driven liquidityglobally, could be developing,” Morgan Stanley strategist Jerry Lou wrote.“Liquidity’s transference into borrowed prosperity could develop and carry thecurrent market rally beyond 2009.”

 

Meanwhile, Chinese stocks were downgraded at BNP Paribas,which said investors should instead buy more Indian equities because valuations,fund flows and liquidity are better in India. The Bombay Stock ExchangeSensitive Index may extend its rally by another 11%, BNP said, advisingcustomers to buy State Bank of India and sell Chinese peers includingIndustrial & Commercial Bank of China (ICBC).

 

ICBC agreed to buy control of Bank of East Asia’sCanadian unit, gaining a foothold for expansion in North America with its firstacquisition on the continent. ICBC has more customers than Russia has people,$247 billion of cash and equivalents, and has spent more than $6 billion onacquisitions in Indonesia, Macau and South Africa during the past 2 years.

 

Goldman Sachs Group, which wants to return $10 billionthis month to the U.S. government, raised HK$14.8 billion ($1.91 billion) byselling shares of Industrial & Commercial Bank of China after the stockjumped 29% in two months. The New York-based firm sold 3.03 billion HongKong-traded shares, or a 0.9% stake in the Chinese bank, at HK$4.88apiece. 

 

Chery Automobile Co, China’s biggest automaker, raised2.9 billion yuan from local private-equity investors to boost its developmentand expansion plans. “The capital will be used in our clean energyprogram, heavy-duty program and a new sedan plant we are planning tobuild,” said Jin Yibo, Chery’s spokesman.

 

The investors, all local funds, include Bohai IndustrialInvestment Fund Management, which is majority owned by Bank of China;Tianjin-based CDH Investments; China Huarong Asset Management Corp; andShenzhen-based China Science & Merchants Venture Capital Management Co Ltd,according to Chery’s statement.

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