Valuation Results in a Slide in China Stocks

FIGURE 1: HANG SENG INDEX Nov. 5th 2014

hangseng nov 5

The hang Seng Index is currently trading at a first time low in seven days following a slide in transport and construction companies with investors pulling back on fears of excessive gains and slowed expansion in the service industry in China.

Among the companies showing a downward trend are: China railway Group LTD and Sany Heavy Industrial Co. both showing a decline of 2.9% and 1, 5% respectively.

There is also a decline is the Shanghai Composite Index of 0.4% on today’s trade at 13:00 p. m in China. Like South Africa, China has huge infrastructure investment plans. For example, there is a plan to invest $16.3 billion for infrastructure that will link its markets to three continents.

As markets are about to open in South Africa, this morning one will watch out on the impact of the Chinese market on the JSE. It would be more likely for the JSE to trade lower today tracking global markets and also following the low oil price.