The Facts !, page-62

Good for Iron ore ?


2:18pm: That bull-market feeling is back in China.

The Shanghai Composite Index’s advance to a three-year high yesterday extended the gain over the past month to 14 per cent, trouncing all 92 of the world’s other benchmark equity indexes by at least six percentage points. Mainland investors are opening stock accounts at the fastest pace in three years, trading in Shanghai has surged to an all-time high and initial public offerings have returned an average 180 per cent in 2014.

Central bank efforts to bolster China’s economic growth are reviving optimism in the $US4.5 trillion stock market after the Shanghai Composite lost more value than any other major benchmark index worldwide in the past five years. While exchange-traded fund investors are paring holdings on concern the gains won’t last, Morgan Stanley says there’s potential for an “ultra-bull” rally where share prices double in 18 months.

“New account openings are a sign that there is fundamental investor participation,” said Jonathan Garner, the Hong Kong-based head of Asia and emerging-market strategy at Morgan Stanley who predicted in June that monetary stimulus would drive a second-half rally in Chinese shares. “Moves on high volumes should always be taken seriously.”

Garner says his ultra-bull scenario is predicated on low returns for investment alternatives such as real estate, a “soft landing” for China’s economy and a transition to a growth model geared toward domestic consumption and services.

Investors should favor “new economy” industries such as health care and technology, along with financial stocks, Garner said.

Read more: http://www.smh.com.au/business/markets-live/markets-live-shares-bounce-through-gdp-gloom-20141203-3lpxg.html#ixzz3KnmO90QV​

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http://www.bloomberg.com/news/2014-...l?hootPostID=c19be9f7809df613eef6878220de58c2​

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