Daily Analysis

    After series of sluggish economic data from  we saw a silver lining from today import-export  data which was highly surprising though there are analyst who says it's "bunk" because it's China but they never criticize US sudden jump on N.F.P after series of worst data.However now eyeing tomorrow's China's CPI and PPI which is going to be key for Chinese economy and Stocks for near future as if it is coming lower than expected we should expect PBOC to cut interest rate soon to boost economy and the obvious impact on Chinese stocks also moreover as China biggest trading partner US economy is stabilizing high exports from China is expected that will boost their orders and overall business sentiment.

Why Buy Chinese Stocks Now?

Some asset managers say the sell- off was overdone and expected a quick rebound.

"According to our head of China equities, the measures were not totally new, nor unexpected," Khiem Do, who is based in Hong Kong as head of Asian multi-asset strategy at Baring Asset Management, said in an email. "How the authorities will implement those rules is another issue altogether."

He recommends buying stocks outside the real estate sector that "offer steady growth at a reasonable valuation." Investors must be careful about buying property, construction and building products because some areas are overbuilt.

"There are a growing number of so-called ghost towns, empty apartments, offices and shopping centers all over China," Do wrote.

The property sector will be volatile for a few weeks as investors get clarity over what the announced measures will entail, said Michael Reynal, the new portfolio manager for RS Emerging Markets and RS Greater China funds.

At the same time, a new crop of national leaders start taking office this week. Reynal is considering buying companies with positive earnings growth that have fallen to historically cheap valuations.

China's ghost towns will fill up quickly as people from agricultural areas increasingly move to the cities, Reynald said, adding that Chinese investment demand will support property prices because investors have few other investing options.

The measures "do not seem to have affected developers' plans on new starts and completions," Barclays wrote in a client note Monday. Developers have managed to sell 60% to 80% of their apartments within two to three months of the pre-sales period.

The outlook for first-time homebuyer demand for smaller apartments remains robust, and inventories in some areas have fallen from their January 2012 peak.

"Most developers are maintaining their new starts and land purchase plans and requesting acceleration of permits from the local government for new developments," Barclays wrote.

   
For more info visit :www.cfb.ae