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China Confidential - Premium Investment Insight
24 September 2012

What happened?

The week to Friday 21 September was not a good one for A share investors. The SSE Composite, the SZSE Component and the CSI 300 indices dropped by 4.57%, 6.16% and 5.03% respectively. As the table below shows, all the Shenyin & Wanguo (SW) sectoral indices fell last week.  Investors collectively took the view that China will undergo a broadly-based economic slowdown. This is in spite of a variety of measures taken by the central government to boost growth.  Sentiment was soured by the report of the State Electricity Regulatory Commission (SERC) in relation to August – which indicated that demand for power had been below analysts’ expectations.

Precious metals-related companies outperformed last week. This was because the latest round of quantitative easing (QE) initiatives that have been announced by major central banks (and, most recently, by the Bank of Japan) are seen as being consistent with higher gold prices.



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