Chinese stocks experienced the biggest gain in last 2 weeks and the biggest gainers of today were the financial and property development companies. The benchmark index traded at the biggest discount to the global markets in the last 3 years. The benchmark gauge Shanghai Composite Index increased by 1.2% and the same is currently at 2,251.81. Therefore, the gauge has been able to par the drop of 0.8% experienced in this year. The measure actually traded at 11.9 times of the reported earnings on yesterday. Incidentally, the multiple is 16.8 times for the MSCI All Country World Index. This is the biggest gap between the two since December, 2009. On the other hand, a report coming out on today showed that the foreign investment in China was less if compared with the estimates set by the analysts.
According to an Analyst of Tebon Securities Co., Zhang Haidong, investors now feel that the stocks may be near a bottom price and they are slowly digesting the economic data as well. Haidong added that mainly because of the relatively cheap valuations, China is still an attractive market. The stock gains of today were mainly led by the brokerages and the earnings are expected to be better than where it stood in 2012.
The index reached its peak on 6th February and from there, it has now declined by 7.5% as investors are concerned that the slowing economy will be responsible for curbing the profits. The overall trading volume on the stock exchange was 29% higher in comparison with the average of the last 30 days. The CSI 300 Index has increased by 1.8% and it is currently at 2,552.71. On the other hand, the Hang Seng China Enterprises Index went down by 0.4%.
According to the data released by the Chinese Ministry of Commerce, the foreign direct investment in China was behind the estimates of the analysts in last month. This highlighted the concern at the growth outlook for the 2nd biggest economy in the world. Investments increased by 0.4% if compared to the figures of a year earlier, less than 6.2% estimated by the analysts.
JPMorgan Chase & the Bank of America Corp. lowered the growth estimates of 2013 for China to 7.6% as the fixed asset investment and industrial production for China in April trailed estimates set by analysts.