Charles Ma, investment specialist, Fortis Investment, says the fall of the Chinese market yesterday was triggered by an IPO. Excerpts:
Your reading of what happened in China yesterday?
The market has risen a lot since the year began. Yesterday was the last date of an IPO by China Construction Companies and there were a lot of redemptions from the secondary market, as the Chinese specifically invest in IPOs. It garnered close to $7 billion. There was also an expected announcement of a cut in gasoline prices. So, the oil sector was hit a little.
How much of commodities is China stockpiling and how much speculation is there in the markets?
The information we get is very limited, but we think the reconstruction of infrastructure after the earthquake is increasing demand for construction materials. There will be more construction going into the future, and demand going forward or at least in the medium term.
What’s the outlook on steel and crude prices?
Overall, we had seen large gains in the past two quarters. I think close to more than 80 per cent. We continue to be overweight on steel and cement, based mostly on the construction theme.
What liquidity access flow are you seeing? What is the outlook right now on emerging markets, speci-fically on India and China?
We see a massive home growth in the first month of the year as far as liquidity in China is concerned. Coming to July, we anticipated a slowdown in terms of month-to-month growth. However, we think that for the whole year, unless exports pick up substantially, they will still maintain the monetary policy.
