Jpmorgan Chinese Investm... Share Discussion Threads

[loganair] 10/7/2015 17:15

The country's main stock market rose 4.6% after Chinese regulators ordered listed companies to submit plans to stabilise their stock prices.

'In plain English, companies must explain how they will buy their own stock, namely through buybacks and management and employee purchase schemes,' said Jasper Lawler, market analyst at CMC Markets.

The latest move in China has all the characteristics of a bear market rally. It's quite conceivable that when companies unhalt their shares and prices reach high enough for shareholders to get close to breakeven, those who are able to will sell out en masse and create the next leg down for Chinese markets.

[binladin] 08/7/2015 16:17

Chinese futures higher ...

[binladin] 08/7/2015 14:58

Only 2p lower in net assets compared to yesterday...should go higher...

[hydrus] 08/7/2015 14:55

Fair enough Loganair - feels a bit soon to be buying to me but if you are a regular buyer then it's a different game

[loganair] 08/7/2015 14:47

Hydrus - Just posting what is being reported.

Depends how one is Buying, in one lump sum or via a monthly investment scheme.

What I'm thinking is to reintroduce JMC into my monthly investment scheme until reaches 180p, then drop it out and go back in again once JMC drops to below 170p on it's second leg down.

[hydrus] 08/7/2015 14:42

Why not wait until the second downturn to start buying?

[loganair] 08/7/2015 14:41

Reported what to look at is the price of Eggs in China, if falling like they are now means people are desperately selling in order to raise cash - Chinese people are Forced sellers of their Eggs at the moment......

[loganair] 08/7/2015 14:36

Reporting Chinese stock market in first stage of Capitulation, stock market will bounce over the next few weeks before resuming the second leg of it's downward trend. Good time to start Buying Chinese stocks for the long term.

[loganair] 08/7/2015 14:29

Shanghai down another 6% over night.

[loganair] 08/7/2015 14:14

Hydrus - The multiple that share prices traded over forecast company earnings had fallen from nearly 20 to 13.3 on the Shanghai Composite index.

Meanwhile the more highly valued and technology weighted Shenzhen Composite index had seen its forward P/E ratio tumble from around 40 to 21.7.

By contrast the MSCI China index, which does not include the A-shares that have been the focus of the frenzied buying by domestic investors, trades at a forward P/E of 9.2.

[binladin] 08/7/2015 14:10

Only way is up from here....

[binladin] 08/7/2015 14:05

The share price is what it was in October 2014

[hydrus] 08/7/2015 13:19

I'd be careful - could well be a deadcat bounce before capitulation. Psychology could play a big part. Remember to check whether Chinese stocks are cheap, not just what percentage they have fallen.

[binladin] 08/7/2015 13:17

HSBC is up 2 percent despite having fallen 3 percent earlier...so I believe the Chinese markets will open higher from here ie the bottom...

[loganair] 08/7/2015 13:00

China's stock market rout gathers strength by Daniel Grote:

Violent sell-off in China hits investment trusts, banks and commodities. Analysts warn implications are more serious than a Greek euro exit.

The violent sell-off in Chinese stocks has gathered strength, with the country's stock market falling 5.9% and a raft of companies suspending trading in their shares.

China investors have continued to dump shares, despite efforts from the country's government to support the market. The country's main stock market, the Shanghai Composite, has now lost nearly a third of its value over the last month.

Investment trusts with exposure to the country have taken a hit in morning trading. Fidelity China Special Situations (FCSS) was the biggest faller on the FTSE 250 index, falling 8.7% to 123.8p, while Templeton Emerging Markets (TEMIT), which holds more than two-thirds of its funds in the Asia Pacific region, fell 2.1% to 491.1p.

On the FTSE Small Cap index, JPMorgan Chinese (JMC) was the biggest faller, down 5.3% at 157.8p, while trusts with broader Asian exposure were also down.

The rout of the Chinese stock market also spilled over into commodity prices, given the country's status as the world's top metals consumer.

Miners have survived further fresh falls in today's trading, but were yesterday's big losers as commodity prices hit lows.

Some commentators have argued the sell-off represents the bursting of a stock market bubble after China shares had at one point boasted a 150% 12-month return.

Jim Reid of Deutsche Bank said China's spectacular stock market collapse threatened more severe consequences than a Greek exit from the euro.

'A freefalling Chinese economy (if it came to that) would be much more important than a "Grexit" for global markets,' he said. 'We're not at that stage yet but if the authorities aren't able to stabilise things soon then there will be collateral damage so this is a crucial story to watch,' he said. 'Expect more intervention to come.'

Government support on cards:

China's central bank has already pledged to provide more liquidity to the market through state-owned brokers and funds, and delay new companies listing on exchanges, but Tim Condon at ING said more support was likely to be required.

Many Chinese investors have borrowed money to invest using 'margin lending' from the stock brokers. Although these were hit by a regulatory clampdown earlier this year the authorities later relaxed the restrictions.

However, interest rate cuts last month and a reduction in the amount of reserves banks have to hold were designed to help market stability.

Tai Hui, chief market strategist for Asia at JP Morgan Asset Management, said the authorities' response had not been effective: 'the subsequent reversal in its previous attempts of tightening on margin finance, in order to ease liquidity worries, and the joint statement by securities companies to buy CNY120 billion worth of stocks could have not had the desired effect in stabilizing sentiment.

'The suspension of trading for a growing number of companies could have also exacerbated the liquidation of other stocks that are still available for trading,' said Hui.

Condon said the government may need to insure investors' debts in order to calm the rout. 'Failure to halt the panic risks damaging the government's image and setting back economic reforms,' he said.

'At this point we believe this may require the government backstopping outstanding margin debt.'

Miranda Carr of Banco Espirito Santo agreed further government action was on the cards, stressing the importance of a stable market for economic reform.

'While previously the stock market gyrations were of limited interest to the government and had limited effect on the overall economy, this time it is more serious,' she said.

'The aim of this administration has been to move to a market-based economy, including a market-based cost of capital, which means raising money through bond and equity markets.'

'With this at stake, further government intervention, including monetary easing, such as a broader [interest rate] cut or more [central bank] injections through open market operations, and support from the main government investment institutions (potentially including a market stabilisation fund) is on the cards.'

Tai Hui said while it was impossible to say when the sell-off would stop the recent correction had improved valuations which would ultimately support long-term investment.

He said the multiple that share prices traded over forecast company earnings had fallen from nearly 20 to 13.3 on the Shanghai Composite index.

Meanwhile the more highly valued and technology weighted Shenzhen Composite index had seen its forward P/E (price to earnings) ratio tumble from around 40 to 21.7.

By contrast the MSCI China index, which does not include the A-shares that have been the focus of the frenzied buying by domestic investors, trades at a forward P/E of 9.2.

'While it is difficult to draw a line on when this volatility will calm in the near term, there are still merits we see in investing China for the long term, as structural developments such as middle class consumerism, the One Belt One Road initiative and policy drive for environment protection and renewable energy are important investment themes.

'The real estate market is stabilising after 1.5 years of correction, which is good news for developers,' said Hui.

[loganair] 08/7/2015 11:53

There’s a healthy correction in Chinese stocks, but long-term, the only way is up - Rupert Foster.....

The very healthy correction required in Chinese A shares is happening – we are now down 30% from the highs, and I think we have another 5%-10% further to fall. This would unwind the entire move up from earlier this year.

[binladin] 08/7/2015 10:24

Time to buy in big time....

[binladin] 08/7/2015 10:13

Need to cover share price from 180-160p...

[loganair] 08/7/2015 08:50

In away the Chinese stock market is similar to the US in 1929 as many of the local retail investors are invested via Margin Accounts. The initial fall in the Chinese stock market has forced retail investors to Sell their shares in order to cover their margins, which means the stock market falls even further and so on and so no.

Margin accounts allow investors to make investments with their broker's money. They act as leverage and can thus magnify gains. But they also magnify losses, and in some cases, a brokerage firm can sell an investor's securities without notification or even sue if the investor does not fulfil a margin call . For these reasons, margin accounts are generally for more sophisticated investors who understand and can handle the risks involved.

If the value of the Company XYZ shares drops and the value of the account holdings falls to 25% (the maintenance margin) of the original £5,000 value (or £1.25 per share), the brokerage firm may make a margin call. Within a few days you must deposit more cash or sell some of the shares to offset all or part of the difference between the actual stock price and the maintenance margin. The broker does this because it has lent you £2,500 and wants to mitigate the risk of you defaulting on the loan.

[binladin] 07/7/2015 16:13

30 percent fall represents a buying opportunity....

[binladin] 07/7/2015 10:00

Have no fear....the whole years profit is wiped out....therefore a good buy.imo

[binladin] 07/7/2015 08:37

Should go to 200p. Time to close shorts...

[binladin] 06/7/2015 11:58

time for a bounce

[loganair] 06/7/2015 11:21

Reading a report predicting China to grow at a rate 0f 3% to 5% per year from 2020 to 2030 and that Vietnam is where China was in the late 1980's and is a better investment as likely to grow at a rate of 6% pkus per year during the same time period.