• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Global Equity

Chinese Shares Rise on Promise of Infrastructure Spending and Pension Support

Asian shares fell across the region except in mainland China, where official pronouncements drove heavy-industry stocks higher.
By ALEX FREW MCMILLAN
Apr 27, 2022 | 09:00 AM EDT

Chinese shares bucked the general downward trend in Asia on Wednesday to close with solid gains, stemming from promises of infrastructure spending and pension fund support. The CSI 300 index of the largest companies in Shanghai and Shenzhen rose all day and closed up 2.9%, finishing at its strongest point of the trading day.

That increase was in contrast to the 0.9% loss for the Topix in Japan, while the chip-driven markets in South Korea (down 1.1%) and Taiwan (down 2.1%) fared worse. There were modest falls for the markets in Southeast Asia, too.

In China, industrials and heavy-industry companies unexpectedly led the way, not normally the most exciting of movers in the momentum-driven Chinese market. That's after Chinese President Xi Jinping stressed the need to strengthen China's infrastructure to an economic planning committee of the Chinese Communist Party.

The oil and gas extractor CNOOC (HK:0883 and SH:600938) shot up the 10.0% limit in Shanghai, where it listed on April 21. CNOOC was delisted from Wall Street last October after it was added to a U.S. Department of Defense sanctions list of companies it believes are owned or controlled by the Chinese military. U.S. investors are barred from investing in those companies. The shares are up 38.7% since listing in Shanghai at C¥10.80.

Several coal-mining and commodities companies also rose fast in Chinese trading on Wednesday, with Yunnan Aluminium (SZ:000807) also up the 10.0% limit. Gold and copper miner Zijin Mining (SH:601899) climbed 6.4% on Wednesday, also benefiting from higher commodities prices, while battery-linked companies such as Ganfeng Lithium (SZ:002460) and Tianqi Lithium (SZ:002466) both were up the 10% limit.

We'll see how long this rally lasts; I have a feeling it will be short-lived. It's notable that the Hong Kong market didn't move today, with the Hang Seng Index ending the day flat on a very narrow 0.06% rise. CNOOC shares, also listed in Hong Kong, rose only 6.7% here. Likewise, Zijin Mining had a more muted move in Hong Kong, up 5.7%, indicating that mainland Chinese policy changes are driving the markets in Shanghai and Shenzhen.

We're seeing Chinese policymakers make all sorts of noise designed to support markets and the economy, but they'll need to translate into action.

On the pension front...

The China Securities Regulatory Commission (CSRC), the equivalent of the U.S. Securities and Exchange Commission, issued a statement after Tuesday's close encouraging fund managers to develop products for private pensions. It wants to "increase the proportion of medium- and long-term funds," explore products with a lockup period, and promote "value investment," the statement says.

The stock watchdog also wants to encourage the increased use of index funds, ETFs and REITs. Aware that Chinese markets have traditionally been driven by extremely short-term retail investing, the CSRC said fund managers should avoid "style drift" and "high turnover" and instead play the "stabilizer" and "ballast stone" roles for the capital markets. It also wants to encourage Chinese fund managers to "go global," although existing Chinese securities laws and a heavily managed currency make that hard.

China last week announced the formation of the first private pension plan for Chinese citizens, which could prove to be pivotal in the development of the fund management industry. Employees at first can invest up to C¥12,000 (US$1,830) per year in a private plan in a scheme that will roll out first to trial cities for one year and then nationwide, with the ceiling amount due to rise with incomes. At the moment, Chinese retirees live on a modest state pension payout and any savings they can accumulate.

The pension fund money can be invested in wealth management products, mutual funds, insurance and as deposits, although we'll see how expansive those are. The guidelines warn the products should be "relatively lower risk" with a "longer-term investment horizon," neither of which sound like typical characteristics of the volatile Chinese stock market.

Mainland shares have sunk to their lowest levels in two years as investors factor in the economic impact of the lockdown in Shanghai and unfolding battle against COVID-19 in Beijing. You can't read too much into day-by-day COVID counts, but Wednesday's figures from the Chinese authorities show the wave of infection may have peaked in Shanghai and has not yet taken full hold in Beijing.

Shanghai, now in its fifth week of lockdown, is accounting for the vast majority of cases in China. The largest city in the world's most-populous nation logged 13,562 new infections in Wednesday's tally, down from 16,980 on Tuesday and 19,455 on Monday.

Those are the lowest figures for weeks in Shanghai, which was regularly topping 20,000 cases per day since case counts exploded at the start of April. Shanghai entered what was supposed to be a two-stage lockdown on March 28, with half the city conducting mass testing at a time, but the entire city was shut down on April 5. There has been plenty of frustration vented on social media in China, posts that are inevitably censored and taken down.

Beijing has recorded 34 new COVID infections as of Wednesday, up from 33 the day before and 20 on Monday. Wednesday's figures are a high for the capital city since Omicron first took hold in China. However, the numbers have yet to show any kind of exponential trend, so the authorities hope they can nip any outbreak in the bud. Given how infectious Omicron is, there's mounting doubt whether snap lockdowns will really work to contain the variant, which promises as it does the rounds to provoke the need to lock down again and again and yet again.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, McMillan had no positions in the stocks mentioned.

TAGS: ETFs | Investing | Stocks | Manufacturing | Asia | China | Real Money | Global Equity

More from Global Equity

Jack Ma Breaks Exile to Appear Inside Mainland China

Alex Frew McMillan
Mar 27, 2023 7:15 AM EDT

Popping up to discuss ChatGPT at a school he established, Alibaba's figurehead waves the 'patriotic' altruistic white flag.

Deutsche Bank Shares Are on the Ropes: Here's What the Charts Tell Us

Bruce Kamich
Mar 24, 2023 8:13 AM EDT

Traders are acting like traders -- sell first and ask questions later.

World's Biggest Unicorn Investor Is Acting Soggy

Bruce Kamich
Mar 21, 2023 1:15 PM EDT

Softbank's weakness is another sign of slowing economic conditions and restrictive monetary conditions.

How to Trade China's E-commerce PDD Holdings Now

Bruce Kamich
Mar 20, 2023 1:17 PM EDT

Previously know as Pinduoduo, weak consumer spending has plagued the stock.

Four of the Most Important Concerns for Investors and the Market This Week

Peter Tchir
Mar 20, 2023 9:31 AM EDT

Things are moving fast, and believe it or not there's even some 'good-ish' news out there.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 04:00 PM EDT CHRIS VERSACE

    AAP Podcast: This Solar Company Is a Head-Turner

    Listen to my interview with Brian Roth, CEO of sol...
  • 01:56 PM EDT PETER TCHIR

    Very Cautious

    I am very cautious here. I don't like how the c...
  • 08:58 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    How to Adjust Your Trading Style as Market Conditi...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login