Confidence creeps back into China

The market's climb also reflects the gradual easing of tension surrounding the transfer of party and government leadership this fall.

By Jim J. Jubak Sep 28, 2012 2:28PM
Image: China (Brand X/SuperStock)
Speculation that financial authorities will use next week’s Golden Week holiday, when stock markets in China are closed, to announce a new stimulus plan for the country's financial markets does, in the short term explains the rally Friday and for this week. 

Although the Shanghai Composite Index lost 6.3% for the third quarter, the index rose 1.5% Friday and finished up 2.9% for the week. The China Securities Regulatory Commission, according to the China Securities Journal, is considering lowering taxes on investing in securities. That would follow on other measures the commission has take this year to support stock prices: a 25% reduction in stock-trading fees and expedited approval for foreign investors.

In the longer run, the market's climb also reflects the gradual easing of some of the tensions surrounding the once-in-a-decade transfer of party and government leadership taking place this fall. Last week saw the re-emergence of Xi Jinping, tagged as likely new leader, back into public view after a two-week absence. 

Friday, the Politburo announced that Bo Xilai, the Communist Party chief in Chongqing and who had been expected to challenge for a seat on the Standing Committee of the Politburo, had been expelled from the party. Bo has been found guilty of accepting bribes, improper relations with women, and abuses of power in attempting to cover up the murder of British businessman Neil Heywood by Bo’s wife Bogu Kailai. She received a suspended death sentence on Aug. 20.

The expulsion of Bo from the party apparently cleared the way for the official transfer of power to China’s new leaders. Friday, at the same time that he announced Bo’s expulsion, outgoing President Hu Jintao finally gave a firm Nov. 8 date for the party congress that will see the new leadership take power. The long delay in setting a firm date had raised worries in China that what was hoped to be a smooth transfer of power had dissolved into infighting at the highest levels of the party.

Given the growing consensus that China’s relatively slow response to the slowdown in the country’s economic growth was a result of paralysis at the top of the government, resolving Bo’s status and setting a date for the transfer of power are reassuring events for investors in China’s markets.

At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. For a full list of the stocks in the fund as of the end of the most recent quarter, 
see the fund's portfolio here. 
Sep 28, 2012 10:30PM


Another article about China?


Let's talk about trucks.  I like trucks!





Sep 30, 2012 7:35PM

NO!! lets talk about China------Some of the best fantacies were fulfilled to me by chinese women----they'll follow your every command(if you treat them right)---next are Vietnamese ---they will do ALmost anything to keep you happy!!!----Korean are the worst----they expect everything , for nothing

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
262 rated 2
480 rated 3
651 rated 4
649 rated 5
629 rated 6
616 rated 7
496 rated 8
346 rated 9
111 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.