Line Break

New figures from the Chinese Ministry of Commerce show that the country has extended it’s FDI growth streak to three months, with 5.7% year on year growth recorded for the month of October to $7.1Bn.

Shanghai, Shenzen & Hong Kong all rallied comprehensively on the news today, with Shanghai recording a 2.75% rise, Shenzen 3.3% & Hong Kong gaining 2.3%, as investor confidence is buoyed by these positive numbers.

In parallel, a seperate report by the Industry Ministry has forecast that China is set to grow it’s industrial output by 16% over November & December, with full year growth potentially reaching 10.5%, well ahead of growth targets set by Beijing in March of 8%.

Minister Li Yizhong reiterated China’s success, with the economy beginning to recover in March & now recording six months of consequential growth, as a testament to the early & vigourous stimulus plan put in place by central government. October’s figures show that the economy has rebounded to pre-financial crisis levels of June 2008, indicating that China is enjoying a V shaped economic recovery.

However, this was surprisingly, caveated with commentary that indicate that Beijing is not entirely convinced that completely plain sailing is ahead. Although Chinese companies are becoming more profitable with increasing export orders, there has still been stagnant inward investment within Chinese industry & Li warned that some companies may be faced with operational bottlenecks in early 2010.

Li said China must continue in its efforts to restructure the domestic economy by focussing on innovation & technology investment. Particular emphasis being given to energy conservation, cutting down greenhouse gas emissions & integrating technology into backward industrial sectors.

Last week, Chinese ETFs traded on the NYSE, FXI & HAO along with close end fund CAF had a pretty torrid time. With a view to this week, we can already see the positive figures in China helping Asian stocks in general, with the S&P Asia 50 Index climbing 1.4% & the MSCI Asia Apex 50 recording a 1.8% increase. There are signs that this may follow through into Europe, with Frankfurt already showing a 1% jump & London following suit on the FTSE 100.

Looking at my own personal favourite Chinese equities that trade as ADRs :

Chinese telco stocks have warmed back up after a non-descript performance last week; China Mobile (CHL), China Unicom (CHU) & China Telecom (CHA) have all advanced in line with the general market.

Materials are also back in the frame (thankfully) ; Aluminum Corp (ACH) enjoying 2.6% gain in Shanghia, with the Hong Kong stock recording a 2.9% jump on the day. ACH had a pretty lacklustre time of it last week, declining 0.65% over the 5 day trading session, so personally am happy to see it regain that & more in a single days bullish trading.

Amongst perennial favourite internet stocks; Shanda Interactive (SNDA) is having a bright start in Frankfurt, adding a little more than 1% in eraly trading, whilst internet portal provider Sohu (SOHU) looks as though it may be shaking off it’s month long malaise by now turning positive 0.5% in Frankfurt.

Some others that I’ll be certain to have a look at pre-US market are Tri-Tech (TRIT), Changyou (CYOU) &  Yingli Green Energy (YGE) which is off to the races in Frankfurt, gaining 3.3%

Potentially the most telling subject in the above commentary from Chinese officials is their ongoing requirement to stabilise both energy production & also emissions. For me this means I’ll be putting some focus into Chinese solar & renewables this week.

Happy trading