CHICAGO, Sept. 19, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the China Petroleum and Chemical Corp. (NYSE:SNP-Free Report), China Mobile Limited (NYSE:CHL-Free Report), Goldman Sachs Group Inc. (NYSE:GS-Free Report), ReneSola Ltd. (NYSE:SOL-Free Report) and Baidu (Nasdaq:BIDU-Free Report).
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Here are highlights from Thursday's Analyst Blog:
China Stock Roundup
Markets had a largely positive week but for Tuesday when the benchmark dropped to its lowest level since March. Stocks of coal producers helped the benchmark register gains on Monday. The Shanghai Composite Index fell to its lowest level in six months on Tuesday after foreign investment dropped significantly.
A substantial injection of funds by China's central bank helped the benchmark rebound on Wednesday. Stocks gained again on Thursday after the central bank took additional measures to introduce further liquidity into the economy. China Petroleum and Chemical Corp. (NYSE:SNP-Free Report), or Sinopec said it intends to sell a stake worth $17.4 billion in its retail unit. Meanwhile, China Mobile Limited (NYSE:CHL-Free Report) plans to concentrate on selling low-cost phones while it awaits the launch of the iPhone 6 in China.
Last Week's Developments
Stocks gained last Friday after speculation increased that the government will take further steps to stimulate growth. Such speculation arose following the release of lower-than-expected credit data. Aggregate financing for the month of August came in at 957.4 billion yuan, compared with 1.58 trillion yuan in the year-ago period.
This report follows comments made by Chinese Premier Li Keqiang who said on Sep 9 that the broadest measure of money supply, M2, increased 12.8% in August. The Shanghai Composite Index increased 0.9% while the CSI 300 gained 0.6%. The Hang Seng China Enterprises Index moved down 0.2%.
For the week, the benchmark index gained 0.2%. This was the second successive weekly increase for the index. Disappointing data on aggregate financing followed a follow in imports and producer prices last month and a decline in the pace of growth of money supply. Analysts were of the view that August economic data would be weak, based on the indications already available. In case the economy runs into trouble, the government would take further measures to boost growth, they opined.
Markets and the Economy This Week
Coal producers negated losses made by financial stocks, helping the Shanghai Composite Index gain 0.3% on Monday. The benchmark index closed in the green after dropping 0.4% earlier in the day. The CSI 300 lost 0.1% while the Hang Seng China Enterprises Index moved down 1.6%. The H-shares index closed at its lowest level since Aug 8.
This decline occurred following a fall in industrial production. Industrial production increased 6.9% in August on a yearly basis, which is lower than the 9% growth recorded in July. Retail sales increased 11.9% while fixed asset investments increased 16.5% during the Jan-Aug period. Both these reports came in below analyst estimates.
The Shanghai Composite Index lost 1.8% on Tuesday, falling to its lowest level since March. This decline came after foreign direct investment fell to its lowest level in four years. Inbound investment declined 14%, coming in at $7.2 billion for the month of August. This follows a 17% fall in July and was the first successive set of declines exceeding 10% since 2009. Additionally, fears that IPOs would lure funds away from older companies also weighed on stocks. The CSI lost 2% while the ChiNext dropped by 3.5%.
A sub-index of consumer discretionary stocks within the CSI lost 2.8%, becoming the second highest loser among the index's 10 industry groups. The index's tech gauge was the highest loser, moving down 4.3%. The Hang Seng China Enterprises Index lost 1.1%. The index suffered its highest five-day loss since Jun 2013, moving down 6.1% over that period.
Stocks increased on Wednesday after a government functionary said the People's Bank of China (PBOC) will inject 500 billion yuan ($81.4 billion) into the nation's leading banks. The Shanghai Composite Index gained 0.5%, rebounding from its largest decline in six months. Each of the country's five largest banks will receive 100 billion yuan via three month loans.
According to an estimate by Goldman Sachs Group Inc. (NYSE:GS-Free Report), the injection is equivalent to a neat half percentage point reduction in required reserve ratios of banks. The CSI 300 also increased 0.5%. A gauge of property stocks led gains with the most prominent real estate companies moving up at least 0.7%. The Hang Seng China Enterprises Index gained 1.6%. The increase ended five successive days of declines, the sharpest since Jun 2013.
The benchmark index increased 0.4% today after the PBOC took further measures to push additional liquidity into the economy. The PBOC reduced the rate on repurchase agreements to its lowest level since Jan 2011. This follows the decision to inject additional funds into the country's largest banks. China's economy has been going through a slump, impeded by a plunge in property prices. These measures indicate the efforts being made to boost a flagging economy.
The CSI 300 gained 0.3%, with a sub-index of health care stocks moving up 1.5%. This is the highest among the 10 industry groups. Overall, banks and pharma companies led gains. Property developers emerged as the largest losers. New home prices declined last month in 68 of the 70 cities which are tracked by the government. These prices decreased the most in Hangzhou, falling 2%. New home prices declined 1.1% in Shanghai and 0.9% in Beijing. Analysts believe that in the short term, they may weigh down the markets.
Stocks in the News
China Petroleum and Chemical Corp., or Sinopec, intends to sell a stake worth $17.4 billion in its retail unit to a large group comprising mainly domestic investors. The move comes amid China's attempt to restructure its extensive state-owned enterprises. The Chinese oil major will divest a stake of 29.99% to investors comprising technology group Tencent, private conglomerate Fosun and China Life Insurance. The deal is believed to set an example as China works toward realizing value in its SOEs and improving their performance.
However, the deal has not opened up the oil sector to outside forces as reformers had wanted. Even Sinopec has not surrendered any control over its productive business, while raising funds from an extended bunch of state-owned enterprises, leading private groups, pension funds and other Chinese investors.
The stakes acquired in this sale range from 2.8% of the total group to 0.1% holding. As per the price, the entire unit's equity is valued at about $59 billion.
China Mobile Limited plans to concentrate on selling low-cost phones which do not require subsidies. This is because the telecom giant is not sure when Apple's iPhone 6 will become available in China. These cheaper phones can be used on 4G networks and will be priced below 600 yuan ($98). These details were revealed by a general manager of the company's technology department. Around 70% of 4G devices will be priced below 1,000 yuan by the end of 2014, the general manager added.
China Mobile is reducing $2 billion from subsidies it utilizes to aid customers to pay for expensive smartphones from the likes of Apple and Samsung. The company is widening its 4G network by 40% and focusing on selling cheaper devices stripped of subsidies and contracts.
ReneSola Ltd. (NYSE:SOL-Free Report) has inked a contract with an Indian engineering, procurement and construction (EPC) firm Juwi India Renewable Energies Pvt. Ltd. (Juwi India) to supply 10 megawatt (MW) of its Virtus solar modules to the latter.
Per the agreement, ReneSola will provide the modules in Sep and Nov 2014. The delivery will be rolled out from the company's original equipment manufacturing (OEM) facilities in India.
Baidu (Nasdaq:BIDU-Free Report) has entered into a R&D partnership with BMW. The auto major and Baidu will jointly develop a highly automated driving (HAD) car for China. This car will utilise the Chinese search engine giant's 3D mapping technology. The two companies also said that they aim to produce a working prototype of the car in three years. However, Baidu has stressed that the partnership may not create a product which will have a commercial release.
A HAD has certain special features which allow it to perform some operations without any inputs from the driver. At this point, it is not clear whether the partnership will result in a car which has contributions from Baidu. It could also be an indicator of BMW's interest in the Chinese market for futuristic vehicles from its own stable.
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