China Policy ‘Fine-Tuning’ May Spark Rally: Citi By Bloomberg News - Oct 27, 2011
China’s policy “fine-tuning” has supported a rebound in the nation’s stocks and may spark a year-end rally, Citigroup Inc. (C) said.
Investors should buy stocks that rely on China’s economic expansion including Jiangxi Copper Co. and Ping An Insurance Group Co. after Premier Wen Jiabao announced this week the government will fine-tune policies at an “appropriate time,” Shen Minggao, the Hong Kong-based head of China research at Citigroup, said in a report today.
“More catalysts in policy and fundamentals are possible to lay a solid footing for a year-end rally,” Shen said. “There is more upside than downside going forward. The market momentum may carry on in the near term.”
The Shanghai Composite Index, China’s benchmark measure, rallied for a fifth day and was set for the biggest weekly advance in a year. The stocks gauge climbed 1.4 percent to 2,470.72 at 9:39 a.m. local time. The Hang Seng China Enterprises Index of Chinese stocks listed in Hong Kong added 3.3 percent today, extending an 18 percent rally this week.
Citigroup joined UBS AG (UBSN) and Barclays Plc in predicting a policy easing after Premier Wen signaled the government is poised to end a two-year monetary tightening campaign as inflation slows and economic growth decelerates.
China’s inflation rate eased to 6.1 percent in September from a three-year high of 6.5 percent in July. The economy grew 9.1 percent in the third quarter, the least in nine quarters.
It’s a good time to be “less defensive” in Chinese stocks, UBS strategist John Tang said in a note yesterday. UBS boosted its rating for consumer discretionary stocks to“overweight” and upgraded the construction, machinery and shipping industries to “neutral’ from ‘‘underweight.’’
China Online Sales Triple; Warehouse Rents Surge By Bloomberg News - Oct 30, 2011
China’s largest online retailers expect sales to as much as triple next year, setting off a rush for warehouse space that’s pushing up rents in the world’s fastest-growing major economy.
“Everyone wants more warehouses,” Ji Wenhong, chief executive officer of luxury goods seller xiu.com, said in an interview. “Any warehouse bigger than 20,000 square meters will be leased the second it’s out on the market.”
Wal-Mart Stores Inc (WMT).-backed Yihaodian is looking for more space in anticipation of need. 360buy.com, China’s second-largest e-commerce company by sales, plans to invest as much as 6 billion yuan ($943 million) over the next three years to build seven distribution centers as the Beijing-based company expects 2011 sales to triple from last year to 30 billion yuan.
Yihaodian sells items from Nokia cell phones to Pampers diapers and Kewpie mayonnaise online and targets a tripling of revenue to 7.5 billion yuan for 2012 from at least 2.5 billion yuan this year. The growth would come after the Shanghai-based company learned from the mistake of not having enough storage space to accommodate rising demand, Yu Gang, president of the company said in an interview.
“Our sales may have gained another 10 to 20 percent if the business was not limited by the lack of warehouse and personnel during the first four months of this year,” he said. “We have learned the lesson.”
Fortress Favors Hu Over Sarkozy in Swaps By Kyoungwha Kim and Lilian Karunungan - Nov 1, 2011
French President Nicolas Sarkozy’s decision to turn to China last week to help bolster European finances comes as traders of credit-default swaps step up bets that the Asian nation has less risky debt than his country.
Five-year contracts protecting China’s bonds from non-payment tumbled 70 basis points in October to 129, the biggest monthly drop since March 2009, CMA prices show. Contracts for France slid 11 basis points to 176. Don Hanna, a managing director at New York-based hedge fund Fortress Investment Group LLC, says he favors selling protection on China and buying insurance on France.
China Airlines Buoyed Most With Warming Taiwan-Mainland Relations: Freight By Chinmei Sung - Nov 1, 2011
China Airlines Ltd. (2610) may gain the most of any air-cargo carrier from warming ties between China and Taiwan as the former foes dismantle barriers to their $150 billion in annual trade.
Taiwan’s biggest airline will add 18 flights to five Chinese cities by the end of this year, cementing its position as the operator of the most cross-straits flights since a six-decade ban on direct shipments was lifted in 2008. Ongoing trade talks probably will further boost the 558 planned weekly airline journeys over the 130-kilometer (80-mile) channel between the two sides, said Fubon Securities Co. analyst Ken Shih.
“Cross-straits cargo flights have gone from zero to rapid-growth, so it’s an area carriers can look to for expansion,”said Taipei-based Shih, who has an “add” recommendation on China Airlines stock. “The next round of flight-easing talks will focus on adding more stops, and that will easily double cargo revenue for airline carriers.”
Trade with China may help cushion Taiwan from any slowdown in demand from the U.S. and Europe for goods such as Acer Inc. and Asustek Computer Inc. notebooks, which are shipped by air. In addition, components made by companies such as Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker, are sent to China as parts for Apple Inc. iPhones or Dell Inc. computers.
Because new flights approved across the strait are split evenly between China and Taiwan, the island’s five carriers get a bigger slice of the pie relative to the mainland’s eight airlines. Slots within each country are handed out based on fleet size, giving China Airlines an edge over Taiwanese cargo rival EVA Airways Corp. (2618)
A 10 percentage-point jump in share from a year earlier gave Taoyuan, Taiwan-based HTC 24 percent of the world’s largest smartphone market in the third quarter, ahead of Samsung’s 21 percent, Palo Alto, California-based researcher Canalys said in a statement yesterday. Apple fell to third at 20 percent while RIM, maker of the BlackBerry, had 9 percent.
HTC, which made the world’s first phone using Google Inc.’s Android in 2008, benefited from strong relationships with U.S. carriers and made different models for each operator. Apple’s iPhone 4S and new devices from Suwon, South Korea-based Samsung may help the two global smartphone leaders gain share in the U.S. this quarter as HTC forecasts its first shipment decline in almost two years.
“Because iPhone 4S wasn’t yet ready during the quarter, there was a window of opportunity for others, and HTC benefited from this,” said Wang Wanli, who rates the stock “buy” at RBS Asia Ltd. in Taipei. “HTC has historically done more customization of handsets, which has made operators more willing to market and sell their devices.”