Chinese stocks experienced a surge on today, for the first time in last 3 days. The gains were led by automakers and the losses experienced by the liquor makers were overshadowed by Jiangxi Copper Co. The benchmark gauge, Shanghai Composite Index experienced a surge of 0.2% and is at 2301.26, at time of close. At point of time in the day, it surged ahead by 1.1%. On the other hand, the CSI 300 Index, measuring the stocks in Shanghai and Shenzhen, experienced an increase of 0.3% and is at 2583.53 now. The benchmark gauge of Hong Kong, Hang Seng China Enterprises Index jumped up by 1% as well. The trading volume in the companies listed under Shanghai Composite was 15% less than the average of last 30 days. The 30-day volatility, on the other hand, is currently near the highest level within the last 13 months.
According to the Analyst of Hongyuan Securities Co., Tang Yonggang, there is sort of fluctuation in the short term, mainly because of liquidity concerns and numerous assumptions made on the company earnings. The Shanghai Composite Index has retreated by 5.5% since its peak experienced on 6th February. Many investors were concerned over the steps of the Chinese Government to cool property prices as they felt such decision would drag the economic growth. Many company earnings also trailed the estimates, becoming another major reason for investors to worry about. Currently, the gauge is valued at 9.4 times of its 12-month projected earnings. The 7-year average valuation for the stock is 15.8 times of the yearly projected earnings.
An analyst of Jianghai Securities Co., Xu Shengjun stated that the stocks pared the earlier gains experienced, mainly because of the concern that regulators will be restarting the initial public offerings. Incidentally, in last October, the China Securities Regulatory Commission suspended the issuance of IPO shares, mainly because the appetite of investors’ for new stocks waned. This was resulted by the declines experienced by the equity markets as the same drove the Shanghai Composite down close to the lowest in 4 years.
According to a report published by the International Finance News, the China Securities Regulatory Commission will restart the IPO sales in April and 60 companies have already received written approvals regarding the same matter. Incidentally, International Finance News is run by ruling Chinese Communist Party.