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Chinese stocks rally for 5th day as Asia's worst performer rebounds but still down -13% in 2010

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October 13, 2010 – Comments (1)

Asia’s Worst

The Shanghai Composite is Asia’s worst performer this year, with a 13 percent decline through yesterday as the government boosted measures to slow the economy and cool property prices. At the same time, Indonesia’s Jakarta Composite Index rallied 40 percent, Thailand’s SET Index jumped 33 percent and Malaysia’s FTSE Bursa Malaysia KLCI Index rose 17 percent.

China stocks will extend their rally as investors increase purchases in a market that lagged behind gains in Asia, according to Templeton Asset Management Ltd.’s Mark Mobius.

The Shanghai index’s rise above its 200-day moving average is a “positive sign” that signals further gains for the benchmark gauge, according to Schaeffer’s Investment Research.

The moving average may climb to April highs after the Chinese stock gauge exceeded the average for the first time in about six months yesterday, said Ryan Detrick, a Cincinnati- based analyst who studies chart patterns to predict prices at Schaeffer’s Investment. The 200-day moving average rose as high as 3,097 in April, according to data compiled by Bloomberg.

--Zhang Shidong. Editor: Allen Wan, Richard Frost

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-7014 or szhang5@bloomberg.net

To contact the editor responsible for this story: Reinie Booysen at rbooysen@bloomberg.net

1 Comments – Post Your Own

#1) On October 13, 2010 at 9:24 AM, JaysRage (94.19) wrote:

I'm not a momentum investor, and it scares me slightly to be supporting your hypothesis, but I generally agree.   There is a Chinese small-cap short shakeout going on.   An enormous number of shorts piled into the sector, driving it down and now it is springing back, and the valuations are not close to normal.   The squeezes are just starting and the whole thing is unwinding.    On top of that, the current fiscal timing corresponds with timing of last year's end-of-the-year Chinese small cap burst.

It should be interesting.   Wise Chinese small cappers who added at the bottom are being rewarded.  

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