Comments on: New Leaders, Same Steady Hand on the Chinese Economic Tiller http://blog.alliancebernstein.com/index.php/2012/11/15/new-leaders-same-steady-hand-on-the-chinese-economic-tiller/?utm_source=rss&utm_medium=rss&utm_campaign=new-leaders-same-steady-hand-on-the-chinese-economic-tiller The AllianceBernstein Blog on Investing Wed, 19 Jun 2013 01:24:59 +0000 hourly 1 http://wordpress.org/?v=3.4.1 By: Stuart Rae http://blog.alliancebernstein.com/index.php/2012/11/15/new-leaders-same-steady-hand-on-the-chinese-economic-tiller/#comment-188785 Stuart Rae Wed, 22 May 2013 07:20:14 +0000 http://blog.alliancebernstein.com/?p=3101#comment-188785 December was a strong month for both the China A and China H markets, but China A still lagged behind China H for 2012 as a whole. The HSCEI index delivered a total USD return of +20.0% in 2012, versus +9.7% for MSCI China A. Year to date in 2013, the gap has closed a little: the total USD return for HSCEI through May 17 was -3.7% versus a gain of +4.0% for MSCI China A (all figures from Bloomberg). That could suggest that the domestic investors are seeing more positive signs of stabilization in the Chinese economy. But it’s hard to be sure about such a conclusion – an alternative explanation is that international investors have been rotating into the “hotter” markets of Japan and the USA, and that’s behind the weaker performance of the HK-listed stocks. December was a strong month for both the China A and China H markets, but China A still lagged behind China H for 2012 as a whole. The HSCEI index delivered a total USD return of +20.0% in 2012, versus +9.7% for MSCI China A. Year to date in 2013, the gap has closed a little: the total USD return for HSCEI through May 17 was -3.7% versus a gain of +4.0% for MSCI China A (all figures from Bloomberg). That could suggest that the domestic investors are seeing more positive signs of stabilization in the Chinese economy. But it’s hard to be sure about such a conclusion – an alternative explanation is that international investors have been rotating into the “hotter” markets of Japan and the USA, and that’s behind the weaker performance of the HK-listed stocks.

]]> By: Brian Fredell http://blog.alliancebernstein.com/index.php/2012/11/15/new-leaders-same-steady-hand-on-the-chinese-economic-tiller/#comment-186862 Brian Fredell Mon, 20 May 2013 16:20:32 +0000 http://blog.alliancebernstein.com/?p=3101#comment-186862 Stewart, where would I find an update on this gap? Have you published one here that I''m not seeing or has the gap remained steady over the past couple of quarters?? Stewart, where would I find an update on this gap? Have you published one here that I”m not seeing or has the gap remained steady over the past couple of quarters??

]]> By: Stuart Rae http://blog.alliancebernstein.com/index.php/2012/11/15/new-leaders-same-steady-hand-on-the-chinese-economic-tiller/#comment-27018 Stuart Rae Fri, 07 Dec 2012 09:13:00 +0000 http://blog.alliancebernstein.com/?p=3101#comment-27018 The domestic A-Share and international H-Share Chinese markets do tend to trade differently – the correlation between weekly price movements of the MSCI China A index and the Hang Seng China Enterprises Index (HSCEI) over the last 5 years to end-Sep 2012 has been just 0.48. Domestic investors are more momentum driven, and typically more short-term in focus. Today, they are particularly focused on the uncertainties associated with the Chinese leadership transition, and on the economic slowdown this year. Investors in China H-Shares seem more willing to take a longer-term view, and see a stabilization and gradual recovery in China’s GDP growth as being positive for the markets. So while the two markets traded similarly through August this year, since then the H-Share market has rebounded considerably and left the A-Share market behind; year to date through end-November, HSCEI is now up +11.46%, while MSCI China A is down a little further at -6.58%. We think the economic growth will eventually win out in domestic investors’ minds as well, and think is it likely that the recent performance differential will close with some recovery in the A-Share market. However, this process may take several months, as we think it is unlikely we will see a big stimulus program or a sharp bounce-back in economic growth in the short-term, and the uncertainties over the new leadership will persist into 2013 until we have more clarity about the agenda of the new leaders, Xi and Li. The domestic A-Share and international H-Share Chinese markets do tend to trade differently – the correlation between weekly price movements of the MSCI China A index and the Hang Seng China Enterprises Index (HSCEI) over the last 5 years to end-Sep 2012 has been just 0.48.

Domestic investors are more momentum driven, and typically more short-term in focus. Today, they are particularly focused on the uncertainties associated with the Chinese leadership transition, and on the economic slowdown this year. Investors in China H-Shares seem more willing to take a longer-term view, and see a stabilization and gradual recovery in China’s GDP growth as being positive for the markets.

So while the two markets traded similarly through August this year, since then the H-Share market has rebounded considerably and left the A-Share market behind; year to date through end-November, HSCEI is now up +11.46%, while MSCI China A is down a little further at -6.58%.

We think the economic growth will eventually win out in domestic investors’ minds as well, and think is it likely that the recent performance differential will close with some recovery in the A-Share market. However, this process may take several months, as we think it is unlikely we will see a big stimulus program or a sharp bounce-back in economic growth in the short-term, and the uncertainties over the new leadership will persist into 2013 until we have more clarity about the agenda of the new leaders, Xi and Li.

]]> By: Joseph Hogue http://blog.alliancebernstein.com/index.php/2012/11/15/new-leaders-same-steady-hand-on-the-chinese-economic-tiller/#comment-26079 Joseph Hogue Tue, 04 Dec 2012 04:04:37 +0000 http://blog.alliancebernstein.com/?p=3101#comment-26079 Any comment on the 2-yr high in the price spread between Hong Kong shares and those listed on the mainland? Are domestic investors disenfranchised by poor returns or do they know something foreign investors don''t? Any comment on the 2-yr high in the price spread between Hong Kong shares and those listed on the mainland? Are domestic investors disenfranchised by poor returns or do they know something foreign investors don”t?

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