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Sancho Panza

China’S Stocks Halt Nine-Day Losing Streak As Banks Gain

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Bloomberg 23/12/13

'China’s stocks rose, led by banks and drugmakers, after a nine-day losing streak for the benchmark index drove valuations down to a four-month low and technical indicators signaled a rebound.

China Construction Bank Corp. (601939) and China Citic Bank Corp. rebounded at least 5 percent after plunging in late trade on Dec. 20. The Shanghai Stock Exchange said “abnormal trading” was caused by foreign investors adjusting their positions to track index changes. Guizhou Bailing Group Pharmaceutical Co. paced gains for drug stocks on expectations the outbreak of the bird flu will boost medical expenditures. Tianjin Zhonghuan Semiconductor Co. tumbled to a seven-month low after receiving a warning from the regulator to disclose information.

The Shanghai Composite Index (SHCOMP) rose 0.2 percent to 2,089.71 at the close. The measure trades at 8.1 times projected profit for the next 12 months, the lowest level since July 31. The 14-day relative strength measure was at 27.4 on Dec. 20. Readings below 30 indicate it may be poised to rise.

“A rebound is imminent as valuations and technical indicators are at pretty low levels,” said Wu Kan, a money manager at Dragon Life, which oversees about $3.3 billion. “The focus is still on money-market rates. Unless they retreat from the current high levels, the rebound may be short-lived.”'

What's a nine day losing streak?

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"A rebound is imminent as valuations and technical indicators are at pretty low levels," said Wu Kan, a money manager at Dragon Life, which oversees about $3.3 billion. "The focus is still on money-market rates. Unless they retreat from the current high levels, the rebound may be short-lived."'
2013-12-25

China’s benchmark money-market rates fell for a second day after the central bank injected cash into the financial system. Small-company shares jumped as concerns about funding costs eased.

The seven-day repurchase rate, a gauge of funding availability in the banking system, fell 83 basis points to 5.61 percent as of 10:53 a.m., according to a weighted average compiled by the National Interbank Funding Center. The ChiNext Index of small-company shares rallied for a second day, gaining 0.8 percent. The yuan held near a 20-year high of 6.0714.

The People’s Bank of China stepped up its efforts to provide lenders with more cash after the biggest surge in borrowing costs since 2011 sparked a selloff in Chinese shares traded in Shanghai, Hong Kong and New York.

“The Chinese central bank’s fund injection is pretty symbolic given the short amount,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “We’ll probably see money-market rates stay relatively elevated towards the end of the year. Stocks will be pressured.”

The one-year interest-rate swap, the fixed payment needed to receive the floating seven-day repo rate, was little changed at 4.97 percent today. It touched a record 5.13 percent on Dec. 23, the highest in Bloomberg data going back to 2006.

The PBOC auctioned 29 billion yuan ($4.8 billion) of seven-day reverse repurchase agreements yesterday, the first sale of the instrument in three weeks, after 300 billion yuan of targeted cash injections last week failed to hold borrowing costs down. The seven-day repo rate tumbled the most since February 2011 yesterday.

more at.. http://www.bloomberg.com/news/2013-12-25/china-stock-index-futures-rise-as-money-market-rates-extend-drop.html

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WSJ 26 Dec 2013... Japan's Nikkei Stock Average rallies 1% to a six-year high +

Meanwhile, China's Shanghai Composite slumped 1.6% to a four-month low Thursday. The lack of additional cash injections by the central bank, which had been used over the last week to soothe fears of a cash crunch, weighed on sentiment.

Described simply as 'profit-taking' at other sources, including here: http://english.cri.cn/11354/2013/12/26/2361s805276.htm

Lots of pics of elderly private investors in front of trading screens, although I'm not claiming to be any more sophisticated an investor.

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WSJ 26 Dec 2013... Japan's Nikkei Stock Average rallies 1% to a six-year high +

Described simply as 'profit-taking' at other sources, including here: http://english.cri.c...2361s805276.htm

Lots of pics of elderly private investors in front of trading screens, although I'm not claiming to be any more sophisticated an investor.

FWIW I think China is looking increasingly vulnerable. Emerging market debt has been blowing up furiously since the taper was first mooted. Trouble in emerging markets could feed back into China (and Japan) very easily here.

For instance, the Turkish 10yr bond yield has risen to over 10% in recent days, and shows no sign of slowing down.

Foreigners unload Turkey bonds

Turkey+10y.PNG

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