Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Markets will remain nervous about debt in China

10.04 AEST, Monday 24 June 2013

Investors starting to see value in banks but markets will remain nervous about debt in China


By Ric Spooner (Chief Market Analyst, CMC Markets)

Investors are likely to start the new week cautiously as they gauge ongoing reaction to last week’s Fed announcement and concerns over the credit situation in China.

The valuation adjustment for tapering of Fed stimulus is well underway. While it may have further to go a substantial valuation adjustment has already occurred in the Australian market. The strength of buying in bank stocks off Friday’s lows and similar levels the week before suggests investors chasing dividend yield are starting to see real value around those prices.

Markets will be relieved at news of a sharp drop in short term interest rates in China at the end of last week. However, signs of a possible credit crunch last week have caused the market to take a closer look at the possibility that debt problems in China may in fact be sufficiently serious to lead to downward revisions in the outlook for economic growth. Consequently economic news from China and its money market conditions are likely to remain front and centre as a key driver of Asian stock markets.

From a technical point of view it would take a rally past the May high at 5249 to provide conclusive evidence that the downward correction has ended. Any rally we do see at this stage is more likely to be a corrective bounce in an ongoing move lower. The 200 day moving average represents near term resistance around 4760 with the 50 day average currently cutting in at about 5000. If we do ultimately see a deeper correction the 50 and 61.8% Fibonacci retracements of the 3985/5249 rally form a potential zone of support between about 4450 and 4600.

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Tourism: China Southern Airlines To Fly To Christchurch

China Southern Airlines, in partnership with Christchurch Airport and the South Island tourism industry, has announced today it will begin flying directly between Guangzhou, Mainland China and the South Island. More>>

ALSO:

Dodgy: Truck Shops Come Under Scrutiny

Mobile traders, or truck shops, target poorer communities, particularly in Auckland, with non-compliant contracts, steep prices and often lower-quality goods than can be bought at ordinary shops, a Commerce Commission investigation has found. More>>

ALSO:

Auckland Transport: Government, Council Agree On Funding Approach

The government and Auckland Council have reached a detente over transport funding, establishing a one-year, collaborative timetable for decisions on funding for the city's transport infrastructure growth in the next 30 years after the government refused to fund the $2 billion of short and medium-term plans outlined in Auckland's draft Unitary Plan. More>>

ALSO:

Bullish On China Shock: Slumping Equities, Commodities May Continue, But Not A GFC

The biggest selloff in stock markets in at least four years, slumping commodity prices and a surge in Wall Street's fear gauge don't mean the world economy is heading for another global financial crisis, fund managers say. More>>

ALSO:

Real Estate: Investors Driving Up Auckland Housing Risk - RBNZ

The growing presence of investors in Auckland's property market is increasing the risks, and is likely to both amplify the housing cycle and worsen the potential damage from a downturn both to the financial system and the broader economy, said Reserve Bank deputy governor Grant Spencer. More>>

ALSO:

Annual Record: Overseas Visitors Hit 3 Million Milestone

Visitor arrivals to New Zealand surpassed 3 million for the first time in the July 2015 year, Statistics New Zealand said today. The record-breaking 3,002,982 visitors this year was 7 percent higher than the July 2014 year. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news