Is Meltdown in China Stocks About to Get Worse?: "After the market close, the China central bank sought to reassure markets, saying that the seasonal factors leading to tight liquidity will fade and that the bank will guide market rates to reasonable levels."
The seven-day repo rate - a gauge of the availability of funds in the interbank market - saw wild swings on Tuesday, trading between 6 percent and 16 percent, according to trading firm IG Markets, much higher than the one-year average of around 3 percent."At the end of the day, valuations will always play a part, if it gets to a certain level where it becomes ridiculously cheap the QFII's [Qualified Foreign Institutional Investor] will increase their weightings on Chinese equities. And on top of that you have the government holdings and pension funds that will support the market also if they want to," said Tay of UBS.
"I don't' think it will collapse," he added.
Chen Jiahe, analyst at Cinda Securities, in fact, advocates picking up Chinese stocks right now.
"The market is overacting I believe it is an excellent opportunity to pick up blue chip companies. Frankly, the Chinese economy is still healthy and valuations are still cheap. This is time for bottom fishing in the long term," Chen said, noting that A-shares are trading at the cheapest price to book ratio on record at 1.3
By CNBC's Ansuya Harjani
No comments:
Post a Comment