Sunday, October 4, 2015

2015-09 Relative Equity Performance

In September, the Chinese consumer goods sector, represented by CHIQ, fell -11.95% over the trailing twelve months.  The materials sector, represented by CHIM, fell -18.95%.  This is the first time in 15 months that this indicator is pointing to a recession.  This would now put this indicator in line with the signals seen from the Consumer Price Index and Purchaser Price Index.  That indicator has been implying a recession has been occurring for close to four years now.

The South China Morning Post reported on the decline in mining and energy stocks at the end of the month:
In Hong Kong, resources stocks were among the biggest decliners. Kazakh copper miner Kazakhmys sank 37.1 per cent to HK$8.80, after copper prices declined further on Monday on Comex in New York. Jiangxi Copper, China's top copper producer, also skidded 4.7 per cent to HK$9.23.

Gold miners pulled back substantially after gold futures posted their largest daily loss in nearly three weeks on Monday on Comex in New York. Lingbao Gold dropped 7.8 per cent to HK$1.30, Zijin Mining Group gave up 4.5 per cent to HK$1.93, and Zhaojin Mining erased 2.6 per cent to HK$4.05.

Mining stocks were "at the heart of" the stock selling, with traders "absolutely concerned about follow-through selling in the commodity complex overnight", said Chris Weston, an analyst for IG Group, on Monday.

In the energy sector, offshore oil producer Cnooc slid 7.7 per cent to HK$7.44 after international crude futures settled sharply lower on Monday. Refining giant China Petroleum & Chemical Corp also sank 7.3 per cent to HK$4.48, and oil and gas producer PetroChina lost 6.5 per cent to HK$5.19.