Weekly Commentary - Reacceleration of Chinese economy and the rebound of China equity market
China reported a slightly faster-than-expected figure of economic growth in the fourth quarter of 2012. It grew at 7.9 percent. Most of the latest release economic data matched the market consensuses. Industrial production grew 10.3 percent versus the consensus of 10.2 percent, and up from 10.1 percent in November. Retail sales were 15.2 percent versus the consensus of 15.1 percent, up from 14.9 percent in November and the highest in the last 10 months. Fixed asset investments in December rose 20.6 percent, versus the consensus of 20.7 percent. They are the clear signs that China has avoided a sharp economic slowdown
The expectation of “bottom-out” of Chinese economy was already priced-in the China equity market over the last two months, as China Shanghai Composite Index rebounded by more than 15 percent. Excluding the financial sector, earnings of Chinese corporations were suffered from the slowdown of China economy in the first three quarters of year 2012. In order to see a sustainable rally in the equity market, investors would like to get the new catalysts from corporate earnings and government policy. How the economic recovery will translate into earnings recovery and the economic policy of Chinese policy will be the next focuses of market player.
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