The response to the news indicates that China is moving towards having a real futures market.
On March 26th’s breaking news from Shanghai Chinese blue chip shares hit their 8 week highs.
The Yuan rose 6.8263 to the U.S. dollar, up from Friday’s close of 6.8273.
Shanghai Composite Index closed at 3,124 which is up over 2% from the close on Friday.
The Shenzhen Composite Index went up to 1,201 1 percent increase.
Analysts say that 3,100 is the current psychological pivot for the market. Having higher trading volume reinforces the sentiment.
To quote Ping An, Securities analyst Li Xianming of Shenzhen, “With the introduction of the stock futures, investors refocused on blue chip shares, as their previous performance has lagged behind the market.”
Chinese lenders, auto manufacturers, and brokerages are among the big gainers.
China’s three largest financial institutions reported better-than-expected annual earnings.
Bank of China Ltd. rose 3.1 percent to 4.36 Yuan Industrial & Commercial Bank of China Ltd. rose 2.5 percent to 5.02 Yuan China Construction Bank Ltd. rose 2.3 percent to 5.71 Yuan
The two largest brokerages were gainers as well. Haitong Securities Co. gained 2.8 percent to 17.07 Yuan Citic Securities Co. rose 3.5 percent to 28.36 Yuan
The auto makers win as well. Zhejiang Geely Holding Group signed a deal Sunday to buy Ford Motor Co.’s Volvo Cars. SAIC Motor Co., The local partner of General Motors Co. Volkswagen AG (VGC), jumped 3.7 percent to 20.45 Yuan, Ford Motor Company partner, Chongqing Changan Automobile Co. rose 1.2 percent at 6.97 Yuan.
China’s Blue Chips increase on on the news indicate that increasingly, capitalist principals are taking deeper root in the economy. It is highly unlikely that the surge in the sectors of auto manufacture, lending, and brokerages is mere coincidence or that there is less than full embrace of the the futures marketplace.
James Horne has been a securities analyst for over 10 years. He is CEO of Pure Reason LLC, the home of Shadowtraders. His voice has been heard by hundreds of students learning to trade Futures with Shadowtraders online day trading strategies. Before you buy any trading software, make sure you attend Shadowtraders Monday Night Webinar, and hosted by Barbara Cohen