There’s a ‘National Will’ For Chinese Stocks to Head Higher: Here Are the Winners

The Shanghai had its best trading session in 9 month’s last night, led high by blue chips. One analyst cited by Reuters, unnamed of course, said it was a matter of ‘national will’ that stocks went higher. An alternative theory would be the PBOC.

One stock analyst at a Chinese securities company said there was “national will” on Thursday for the market to go up.

The blue-chip CSI300 index .CSI300 rose 1.8 percent, its biggest gain since Aug. 15, and ended at 3,485.66 points, its highest close in more than a month.

The Shanghai Composite Index .SSEC advanced 1.4 percent to 3,107.83 points.

Chinese stocks also rose a touch on Wednesday after Moody’s clipped China’s credit rating by one notch, prompting official criticism.

The strongest performers in China’s markets on Thursday were banking .CSI300BI and real estate stocks .CSI300REI, whose indexes jumped 3.3 percent and 4.0 percent, respectively.

The SSE 50 .SSE50 – dubbed China’s “Nifty Fifty” index – leaped 2.7 percent to close at a near 17-month high.

Year to date, Chinese stocks listed here are higher by about 10%. I know this because years ago I quarantined all Chinese stocks in Exodus, after seeing they traded in a convoy and rarely in line with their respective industries. Here are the winners of 2017, thus far.

SORL +185%, MOMO +109%, HPJ +87%, CYOU +87%, WB +85%, BZUN +75%, EDU +73%, PME +70%, ATHM +70%, BITA +68%, etc.

The list is endless, really.

Here are the heavily shorted stocks.

By the way, and on a separate note, there isn’t an advantage to owning heavily shorted stocks over the long run. I’ve looked at the data and was even biased in favor of buying heavily shorted stocks heading into my research, but couldn’t find a quantifiable edge. You’re better off sticking to fundamentally sound quintiles of stocks, then further filtering by whatever technical factors that appeal to you.