30 per­cent

China Daily (Hong Kong) - - MARKETS | BUSINESS -

growth in e-com­merce sales in Nov may help con­sumer stocks

The “mod­est shift” in key US in­ter­est rate could also mean bet­ter prospects for emerg­ing mar­kets like China, ac­cord­ing to a re­search note from as­set man­age­ment firm Legg Ma­son.

An­a­lysts ex­pect com­pa­nies in these sec­tors will con­tinue to see rev­enue growth as the Christ­mas, New Year, and Chi­nese New Year hol­i­days are ap­proach­ing.

“Con­sump­tion-driven sec­tors, de­spite all the un­cer­tain­ties about the macroe­co­nomic sit­u­a­tion and short-term pol­icy changes, are likely to stand out at the year-end, when com­pa­nies see sig­nif­i­cant in­come through sales rev­enue,” said a re­search note from Chang jiang Se­cu­ri­ties.

Rail­ways, air­lines, liquor mak­ers, jew­elry re­tail­ers and restau­rant op­er­a­tors are par­tic­u­larly likely to see share price growth in the next cou­ple of weeks, said the re­search note.

The ex­pec­ta­tion that pen­sion funds will start in­vest­ing in the A-share mar­ket in the next cou­ple of weeks, may sup­port re­cov­ery in bench­mark in­dexes af­ter a weeks-long cor­rec­tion, said an­a­lysts.

Al­though the ex­act date for pen­sion funds’ en­try into the A-share mar­ket has not yet been an­nounced, it is ex­pected to be near the end of this month or at the be­gin­ning of 2017, ac­cord­ing to a CITIC Se­cu­ri­ties’ re­search note.

Dai Kang, an­a­lyst with Hu­atai Se­cu­ri­ties, said pen­sion funds will have lower tol­er­ance to risks, and may fa­vor “de­fen­sive” sec­tors like phar­ma­ceu­ti­cals, foods and bev­er­ages, and high-tech man­u­fac­tur­ing.

“In the longer-term, the move will also help make the A-share mar­ket more sta­ble, with more in­sti­tu­tional in­vestors and value-ori­ented in­vestors par­tic­i­pat­ing,” said Dai.

Last week, the in­sur­ance reg­u­la­tor said it will seek to re­duce the pro­por­tion of to­tal eq­uity as­sets held by in­surer funds to 30 per­cent from the cur­rent 40 per­cent, to curb spec­u­la­tive and over­lever­aged in­vest­ments in stocks. This could im­prove in­vestor sen­ti­ment, said re­searchers.

“It is good for both the stock mar­ket and the in­sur­ance sec­tor to see clear bound­aries be­tween the law­ful use of in­sur­ance funds to grow value and serve the goal of pro­tec­tion ver­sus mis­use of in­sur­ance funds for short-term, lever­aged, and spec­u­la­tive stock trad­ing,” said a re­search note from Haitong Se­cu­ri­ties.

SU YANG / FOR CHINA DAILY

A pen­sioner, ten­sion writ large on his face, checks stock prices at a bro­ker­age in Nan­jing, Jiangsu prov­ince, on Dec 12, when Chi­nese stocks fell the most in six months.

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