Is China Bull Market Dampening car sales?
... from
http://blogs.barrons.com/asiastocks/201 ... s&ru=yahooBefore the monthly figure was released, Barclays‘s Yang Song and Joel Ying wrote that they expected May to be weak, and it was not just because of seasonality. “The strong stock market continues to crowd out auto purchases,” the analysts wrote.
Really? Are cars substitutes to stocks in China? Back in the good old days before the 2008 Financial Crisis, my colleagues at Lehman Brothers bought fancy cars as soon as they heard their bonus numbers. How about wealth effect? Don’t you want to spend on luxury items (and cars still are in China) when you feel richer?
But auto analysts should know better. So if it was indeed the stock market that dampened auto sales, then we shouldn’t worry about today’s numbers. After all, the bull market won’t go on like this forever and Chinese consumers will eventually look at what they want to buy with their capital gain.
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Fact is, 1114 at 52wk low (very close to longer term support)
Restocking in 4Q 2015 can become a catalyst for this stock
Targets are all around 17 HKD
And... when the China stock market cools down, people will take profits and will be more able to buy a premium car
The 7 series looks good, the 5 series still most profitable, 3 series destocking probably almost finished, 2 series?
=> current risk/reward looks attractive, ideal entry around 10.5 (but 11.14 probably good too). But it should stay above 9.6