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Slowing economic data, deteriorating loan quality, and some end-of-quarter panic sparked fears of a Chinese hard landing, which caused China’s stock market to sell off last week.Deutsche Bank’s Jun Ma released a report yesterday saying stocks could fall another 15%.
Three more analysts from Deutsche Bank offered some more colour on what’s goin on in China.
Chinese cement sector stocks are factoring in a hard landing and cement shares have sold off hard. Average selling price (ASP) is expected to weaken but be cushioned by restricted supply. Deutsche Bank analyst Johnson Wan said:
“We think that ASPs, while expected to decline in 2012, should not decline as sharply as the recent sell-off suggests due to supply constraints.”
The slowdown in GDP growth to about 7% is expected to impact commodities according to Deutsche Bank chief energy economist Adam Sieminski:
“GDP growth to 7% or below into the first quarter of 2012. We believe the industrial metals and bulk commodity sectors will be most vulnerable to these developments given the large share that China represents in terms of global demand growth for these commodities.
…China’s restocking cycle, particularly for copper, has been cited as a source of support for the market. However, what we have seen in the past is that during periods of commodity price corrections, these are accompanied by inventory restocking…”
Meanwhile, Chinese internet stocks like Baidu, Renren, Sohu and Dangdang have all taken a beating Chinese internet stocks like Baidu, Renren, Sohu and Dangdang have all taken a beating and Alan Hellawell says this is in part because of fears of accounting irregularities, and because of anxiety over how the Chinese government will rule on variable interest entities (VIE) that allow internet companies to list abroad and be held directly overseas.
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