China gets ’sell’ tag placed on its shares
China’s A shares are a “sell” even after the government stepped in to support the world’s fourth-biggest stock market, according to Morgan Stanley and Credit Suisse Group.
Corporate earnings growth this year may disappoint, Morgan Stanley analysts Jerry Lou and Allen Gui said in a report yesterday. Chinese companies’ Hong Kong-listed “H shares” are more attractive than yuan-denominated “A shares,” Credit Suisse’s Vincent Chan wrote in a separate note, Bloomberg News reported.
The 17-year-old Shanghai Composite Index fell 0.71 percent yesterday.
“Given earnings deceleration, we do not think such a rally can last,” Morgan Stanley’s Lou and Gui wrote. “The government’s cut of the stamp duty seems to suggest that it is running out of silver bullets.”
The benchmark CSI 300 Index plunged as much as 39 percent this year to become the world’s second-worst performer amid speculation government steps to quell inflation would hurt corporate profits. The Shanghai Composite tumbled as much as 41 percent in that time.
China in December tripled to US$30 billion the amount overseas institutions can invest in yuan-denominated stocks and bonds.
Tags: inflation, Shanghai-Stock-Exchange