Analysts suggest to sell A-shares in May
April 24, 2017 Category Stock Markets, Weekly
Some analysts say this May is a good time to sell Chinese A-shares, as an anti-corruption storm is brewing in the financial sector, which has already jarred investors’ nerves and sparked panic capital flight from speculative stocks. “The situation is getting tense,” said Yan Kaiwen, Equity Analyst at China Fortune Securities. “The most important thing is that regulators are tightening the screws.” “We will resolutely clamp down on any attempt at disturbing the market order and never relent in our fight,” said Liu Shiyu, Chairman of the China Securities Regulatory Commission (CSRC). Xun Yugen, Chief Strategist for Haitong Securities, advised A-share investors to “sell in May”. “Beware of a cold spell in later spring,” he said, citing concerns on the “policy side”. De-leveraging is the priority of Chinese authorities in 2017, but it will cause a liquidity squeeze in financial markets and a spike in interest rates, Xun said. More than a dozen stocks plummeted recently without any major news, including Ping An Insurance, Industrial Bank, Jiangsu Xiuqiang, and Guangdong Super Telecom. “The ‘flash crashes’ in these stocks’ prices suggest money has started to escape without considering the cost,” Yan said. “I think they have noticed the risks and reacted early.” Their has also been excessive speculation related to the newly established Xiongan New Area near Beijing. Xun from Haitong Securities also suggested investors keep a close eye on the U.S. President’s three major policies on immigration, income tax cuts, and border tax, which could “further complicate trade frictions between China and the U.S.,” the South China Morning Post reports.
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