Chinese stock market seems not impressed by the "recovery"16 November, 2012, 15:40. Posted by Zarathustra
There seemed to be some good reasons for the bulls to feel bullish about Chinese equities. Economic data seemed to be improving (the improvements may look unreal for people who look hard enough, but they look like improvements for most eyes anyway), money seemed to be flowing it (although it may not be very true, depending on how you look at it), and despite corporate profits were still falling in Q3, the market looks very oversold according to seemingly everyone.
The chart below from Jefferies show the equity fund flow into China picking up in the recent weeks. Similar pattern is seen for Hong Kong.
Unfortunately, performance of Chinese equities remain mediocre. The chart below shows the Shanghai Composite, which closed at a post-crisis low on 26 September and went on rebounding, only to come almost all the way back down.
So while the street looks convinced that the worst for Chinese economy is somehow over (for whatever reason), Chinese stock market looks just as unimpressed as we are.