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business newsChina Bursts With Bullish News
For the month of May, exports jumped 48.5% and home prices increased only 12.4%. The data are lifting global markets.
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The increase in exports was much bigger than analysts expected and it meant that China recorded a trade surplus in May of $19.5 billion, much bigger than the surplus of $1.7 billion during the month of April and the trade deficit from the month of March. The news is bullish because Europe is China’s largest export market and it shows that Europe’s problems have yet to affect demand for Chinese goods.
Increasing the likelihood of a “soft landing,” the Chinese government also reported Thursday that housing prices have only risen 12.4% (year-over-year month of May), down from the 12.8% the month before. That said, double-digit price appreciation should still be looked at as bubble territory but the data are starting to show that the government’s efforts to cool the housing market may be working.
The bullish news out of China is lifting the global markets this morning as fears of a slowdown may be overblown. However, with such strong export data, the calls for China to abandon its dollar peg should pick up steam again.
How to Play It:
One of the biggest fears of market participants was that China was going to slow down, thus hampering global growth. These fears now look overblown. One way to play China is with an ETF like the China 25 Index (FXI) or the SPDR S&P China (GXC).
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For those who like individual names consider Home Inns & Hotels Management (HMIN). The company operates hotels in China, covering more than 120 cities. The company has strong earnings growth and those bullish on China’s rebound could consider the stock here.
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