The Shanghai Composite Index (SHCOMP) fell 0.1 percent to 2,211.06 as of 1:12 p.m. local time. The measure yesterday wiped out losses this year of as much as 11 percent and climbed above its 200-day moving average. The CSI 300 Index (SHSZ300) slid 0.1 percent to 2,446.14, led by consumer discretionary companies such as automakers. Hong Kong’s market is closed today for holidays.
“The momentum is still there as the economy continues to recover and new leaders promise more reforms to boost growth,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “The market might have some fluctuations at this level but the trend is upward.”
Trading volumes in the Shanghai Composite were 70 percent higher than the 30-day average today. The index has risen 13 percent since this year’s closing low of 1,959.77 on Dec. 3 as the nation’s new leaders said they would promote urban development as part of economic reforms.
The 14-day relative strength measure for the Shanghai index, measuring how rapidly prices have advanced or dropped during a specified time period, was at 72.8 yesterday. Readings above 70 indicate a price may be poised to fall.
High RSI
SAIC slid 3.2 percent to 1642 yuan. The 14-day relative strength measure for the stock was at 85.2 yesterday. The shares have jumped 21 percent over the past month, twice as much as the Shanghai index.
FAW Car Co. (000800), which makes cars in China with Volkswagen AG, tumbled 4.5 percent to 8.33 yuan. Great Wall Motor Co., China’s biggest pickup truck maker, lost 1.1 percent to 21.99 yuan.
ICBC declined 1.2 percent to 4.09 yuan. Bank of Beijing Co. slumped 2.8 percent to 9.03 yuan. China Minsheng Banking Corp. (600016), the nation’s first privately owned bank, slipped 0.9 percent to 7.68 yuan. The stock closed at a four-year high yesterday.
China’s money-market rate climbed on speculation banks are hoarding cash to meet year-end capital requirements and holiday withdrawals. The seven-day repurchase rate, which measures interbank funding availability, rose 13 basis points to 3.85 percent as of 11:54 a.m. in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center.
Urbanization
The Shanghai Composite, up 0.4 percent this year, trades at 10.8 times estimated earnings, compared with 12 times for the MSCI Emerging Markets Index, according to weekly data compiled by Bloomberg. Thirty-day volatility in the gauge was at 20.2, compared with this year’s average of 17.
China’s largest cities including Beijing, Shanghai and Guangzhou will limit populations under a new urbanization plan, while smaller cities and towns will loosen controls on residency, the Shanghai Securities News reported, citing an unidentified person.
The country will also improve infrastructure and public services for transportation, communication, sewage and garbage disposal, health-care and education in urban areas, the report said. Urbanization is expected to spur 40 trillion yuan ($6.4 trillion) of investment by 2020, the Southern Metropolis Daily reported yesterday, citing a draft plan by the National Development and Reform Commission on urbanization.
“Developers are gaining on the government’s call to use urbanization as a new engine for growth,” Gao Jian, an analyst at Northeast Securities Co., said in a phone interview.
Property Stocks
A measure of property stocks in the Shanghai Composite climbed 1.3 percent today, extending yesterday’s 4.1 percent jump. The sub-index is heading for its highest close since July 2011 and the biggest two-day gain since Jan. 10. Poly Real Estate, China’s second-largest developer by market value, added 0.5 percent to 12.90 yuan. Gemdale, the third largest, gained 0.3 percent to 6.42 yuan.
China Vanke Co. (000002), the biggest developer, was suspended from trading pending “important matters,” it said. The company plans to convert its Shenzhen-listed B shares traded in Hong Kong dollars to H shares and list in Hong Kong, the Securities Times reported, citing an unidentified company official.
The statistics bureau is scheduled to release November profit for industrial companies tomorrow. Net income surged 20.5 percent from a year earlier in October, according to the bureau.
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