Banks Set to Lead China Stocks Higher

Gene Linn |

Banks Set to Lead China Stocks HigherChina stocks ended a volatile week higher on Friday, with banks set to lead the market to further gains.

Global stocks started the week in a swoon, after the US reported disappointing job results and the European debt crisis heightened. But strong results from US aluminum giant Alcoa (AA) kicked off a mid-week rally.

Hong Kong's Hang Seng Index ended the week 0.06% higher at 20,701, and the index of Chinese companies rose 1.8% to 10,937. Turnover was light throughout the week, but increased a bit Friday.

In China news, GDP growth posted a higher-than-expected drop to 8.1%, raising expectations that China would implement moves to stimulate growth.

Those moves, such as cutting banks' required reserve ratio, would benefit the banking sector. And that sector got more good news Friday when China announced the city of Shenzhen would launch financial reform that would attract overseas RMB holdings.

“I think the new measures will recycle offshore RMB so it will become onshore RMB, and that will help banks,” said Peter So, managing director and co-head of research at CCB International.

One major benefactor would BOC Hong Kong (BHKLY) because it handles the bulk of RMB trade in Hong Kong, So told Equities.

He expects banks to lead the Hang Seng to 21,700, possibly next week.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

Nano One Materials Corp.

Nano One Materials Corp is a technology company. The Company manufactures storage materials for lithium ion batteries.

Private Markets

WayBetter

The spark hit Jamie when he saw co-workers competing to lose weight. Instead of pizzas and subs, they were eating salads and jogging along the river. Some were sneakily leaving…

XY Find It

Founded by serial entrepreneur Arie Trouw, XY Findables follows a single guiding principle: customers should never lose anything important again. With over 50,000 users around the world, more than 100,000…