Stock Market: Look at China, not US, to make money

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By S Jha

New Delhi, March 25: The US equity markets may be setting the direction of the global bourses. But money is made in the stock market by looking at China, say a number of market participants.

China is the factory of the world. Any disruptions in any of the segments in China send share prices of some of the companies soaring with no limits upside in quick time. After three years, China finally gave up on ‘Zero Covid Policy’ to reopen the economy.

Chinese President Xi Jinping is seeking an accelerated integration with the global economy despite the western world developing red eye for the dragon play. Yet, the world is dependent on China, and they may be welcoming back Beijing in the global supply chains with hopes that inflation may finally start cooling down.

In a span of 18 months, the share price of HEG had climbed from Rs 273 on June 2, 2017 to Rs 4286 on August 3, 2018. This amounted to the share price of HEG multiplying by a whopping almost 20 times. Stock market is full of such stories, but this had a China connection.

HEG’s products are key to steel manufacturers, which went in shortage in China in the period when the share price of the company just blasted off the roof. After China dealt with the issue of shortage, the share price of HEG also came down to the level of Rs 800 in quick time.

Now that Adani group of companies is in the news for the share prices zooming several multiple times in a short span of time, there had been instances when the China factor guided the companies to the dizzying heights on the bourses.

China had taken stringent measures between 2013 and 2017 against the polluting industries. This created a boom to the Indian tyre manufacturers. TVS Srichakra in a span of two and a quarter years went soaring from the level of Rs 256 on February 14, 2014 to the level of Rs 4026 on September 30, 2016. This again gave the investors a 20-fold returns.

Now, Chinese economy has reopened and some of the sectors in India have turned bearish, which include steel and chemical, dominated by China. At the same time, the government is also taking steps to cut down on some of the imports. But the opportunities for the investors may come disruptions in China in some of the specific sectors.