The Hang Seng China Enterprises Index (HSCEI), also known as the H-share index, gained 0.6 percent to 9,416.34 as of 9:31 a.m. in Hong Kong after closing yesterday at the lowest since July 10. The measure dropped 19 percent from a Dec. 2 peak through yesterday, nearing what some traders consider a bear market. and has posted the biggest retreat this year among global benchmark equity gauges tracked by Bloomberg. The Hang Seng Index added 0.1 percent to 21,923.19 today.
“Sentiment is driving the market in China,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital, which manages $131 billion. “Underpinning that though is the willingness and determination of Chinese authorities to maintain growth at around 7.5 percent, which is still reasonable.”
China’s industrial production probably rose 9.5 percent in the January-February period from a year earlier, based on the median estimate of analysts surveyed by Bloomberg ahead of data due today from the National Bureau of Statistics. Output expanded 9.7 percent in December from a year earlier.
H-shares are valued at 1.1 times net assets, the biggest discount since September 2003 to the MSCI All-Country World Index of developed and emerging shares, which has a multiple of 2. The H-share gauge traded at 6.3 times estimated earnings yesterday and the Hang Seng Index (HSI) had a multiple of 9.9 yesterday, compared with 15.9 for the Standard & Poor’s 500 Index.
“I’m a big buyer of China,” said AMP’s Naeimi. “From a valuation point they are so cheap. These levels are great.”
Disappointing China credit and trade data is fueling speculation the nation may not meet its economic-expansion target. Aggregate financing slumped to 938.7 billion yuan ($152.7 billion) in February from a record 2.58 trillion yuan the month before, a report this week showed. Exports slid the most since 2009 last month, according to data released over the weekend.
Futures on the S&P 500 climbed 0.2 percent. The U.S. equities benchmark rose less than 0.1 percent yesterday as investors watched developments in Ukraine and weighed prospects for global economic growth.
To contact the reporter on this story: Adam Haigh in Sydney at firstname.lastname@example.org