CHINA-Shanghai Comp : 2013 could be a promising investment year
By Rodolphe Steffan
The Chinese economy has shown more and more reassuring signs of upturn since the end of September. The Chinese manufacturing activity in December grew at its fastest pace in 14 months, thanks to an increase in new orders and the resilience of employment according to the first result of a survey of purchasing managers. The HSBC PMI "flash" was released at 50.9, its highest since October 2011. This indicator had increased for the fifth consecutive month, a development that strengthens the hypothesis of a stronger recovery than expected in China.
The improvement reflects the government investment projects announced in the second quarter and which begin to produce their effects on the economy. This important upturn in the activity can be explained by good numbers in construction and distribution industries. The strength of China's services sector shows that the Chinese economy quickly came out of its slump...Investors could take interest in the Chinese stock market again.
Technically, the dynamics of the index is now bullish in weekly data above 2100 points which also refers to the 20-week moving average. One month ago we had reported that it was the time to take long positions. We reiterate our advice to target 2450 points in the first half of 2013. Any pullback on 2100/2130 points will be the opportunity to obtain long exposure to the Chinese market. We can play this bullish trend thanks to a tracker on CSI 300 (IE00B5VG7J94).