NETWORKING SECTOR BULLISH
China Market Trends - April 17th
Apr 17 2001 4:39PM
Reg Handford
Synopsis
April 17, 2001
Beijing
Today was another solid volume day, 1.028 billion shares in Shenzhen and 1.538 billion in Shanghai. All major indices closed up, with the B share indices performing the best. The B's remain the best performing indices on the planet at this time.
Some subindices were down, notably Shenzhen Financials, down 0.83%. The pullback I suggested yesterday was nowhere in evidence. It was a down day in Hong Kong, -2.73%, but this did not affect the mainland.
The 'Xiaxin indicator' was positive. This 'indicator' involves me walking out of the Prime Tower, over to Union Plaza, and seeing how many people are in the observation room of Xiaxin brokerage. It was almost full, and this was at lunch time when the market is halted. When the crowd drops off some day, we will turn negative on this indicator, but today was the fullest I have seen.
Yes, some stocks are breaking down, but for now it is a bull market.
Chart Review
One stock we mentioned on March 27th, Shanghai Vacuum (600602.ss A shares and 900901.ss B shares) has since gone vertical.
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China Galaxy Securities, China's largest brokerage, announced two days ago that they were establishing a new series of indices for sectors in China. Perhaps that will make it easier to follow different sectors in the China markets.
In this case, 600602 is in the wide area network sector, and is slated to provide many components for Shanghai's aggressive plan to deploy broadband access availability to more than 3 million households in the greater Shanghai metropolitan area.
Another cable network company is 600899.ss, Shanghai listed Zhejiang Xinxian Co. Ltd, which is involved in network construction, network development and network services, has been incredibly hot, illustrating how 'sector' is of vital importance in China:
A move like this is not easy to stop. It was rumor-driven on the Internet, and the takeover rumor was vigorously denied by the company last Friday, but investors didn't mind, and slammed it yet higher. The company has increased its working capital by RMB20 million through collateralized bank loans. There are 54,000,000 shares in the float, a medium amount by Chinese standards, so a sudden influx of buying has had a strong effect.
International Markets
Earnings warnings continue to dominate the American market, the latest being Cisco's. This had a negative effect today on Hong Kong but not on the mainland. Despite the avalanche of bad news the market (Nasdaq and Dow) continues to do better than one would expect.
A trendline up from the April 4th bottom on the Nasdaq can now be drawn. Because of the frailty of early rallies and the nasty economic news, a breaking of this trendline is a clear order for traders or intermediate players to exit the market until a new uptrendline could be established.
Otherwise, the charts are bullish because of their surprising defiance of bad news. Click Defiance.
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