Hard landing alert: China's inflation rate is dropping, but analysts expect it's for all the wrong reasons. Is China cooling more quickly than expected?
China, which is planning to slow growth, might take pleasure in the 14-month low inflation rate, but analysts point out it is international forces that are slowing it down more than internal events.
"Curbing inflation is a good thing, but the reason why inflation is slowing is because the global economy is slowing," said Koji Toda, chief fund manager at Resona Bank Ltd. in Tokyo. "If you see that fact, you can't be so optimistic." (via Bloomberg)
"Cautious approach"
In response, China will likely signal "a cautious approach" to further easing in the short term. "The money tap will be loosened, no doubt," said Stephen Green, a Hong Kong-based economist with Standard Chartered.
The largest outside forces that affect inflation of the Yen include the eurozone debt crisis and falling investment in Chinese property due to tightening measures.
Investing ideas
Do you think China is in store for a hard landing?
Investors are getting anxious about Chinese investments -- are they still a good idea? To find out what sophisticated investors are doing we decided to screen a universe of Chinese stocks for those with significant levels of institutional buying.
Institutional buying (net purchases from mutual funds, hedge funds, pensions, and bank trust departments) signals that sophisticated investors believe there is more upside than downside to the names.
The "Smart Money" feels confident about these names -- do you? (Click here to access free, interactive tools to analyze these ideas.)
1. Isoftstone Holdings Limited (NYSE: ISS ) : Provides various information technology (IT) services and solutions in the Greater China and internationally. Market cap of $476.62M. Net institutional shares purchased over the current quarter at 10.8M, which is 36.47% of the company's 29.61M share float.
2. E-Commerce China Dangdang (Nasdaq: DANG ) : Operates as a business-to-consumer e-commerce company in the People's Republic of China. Market cap of $412.20M. Net institutional shares purchased over the current quarter at 5.5M, which is 19.75% of the company's 27.85M share float.
3. Home Inns & Hotels Management (Nasdaq: HMIN ) : Develops, leases, operates, franchises, and manages a chain of economy hotels in the People's Republic of China. Market cap of $1.35B. Net institutional shares purchased over the current quarter at 3.7M, which is 15.26% of the company's 24.25M share float.
4. China Kanghui Holdings (NYSE: KH ) : Develops, manufactures, and markets orthopedic implants and associated instruments. Market cap of $342.31M. Net institutional shares purchased over the current quarter at 1.1M, which is 11.41% of the company's 9.64M share float.
5. Sohu.com (Nasdaq: SOHU ) : Engages in the brand advertising, online gaming, sponsored search, and wireless businesses in China. Market cap of $1.99B. Net institutional shares purchased over the current quarter at 2.7M, which is 9.05% of the company's 29.82M share float.
6. Simcere Pharmaceutical Group (NYSE: SCR ) : Develops, manufactures, and markets branded generic and proprietary pharmaceuticals in China. Market cap of $401.55M. Net institutional shares purchased over the current quarter at 1.2M, which is 8.21% of the company's 14.62M share float.
7. Ctrip.com International (Nasdaq: CTRP ) : Provides travel services for hotel accommodations, airline tickets, and packaged tours in the People's Republic of China. Market cap of $3.33B. Net institutional shares purchased over the current quarter at 10.0M, which is 7.54% of the company's 132.65M share float.
8. Ambow Education Holding (Nasdaq: AMBO ) : Provides educational and career enhancement services in high school entrance examination and college entrance examination markets in China. Market cap of $490.41M. Net institutional shares purchased over the current quarter at 963.2K, which is 6.82% of the company's 14.12M share float.
9. Shanda Games (Nasdaq: GAME ) : Engages in the development and operation of online games in the People's Republic of China. Market cap of $1.24B. Net institutional shares purchased over the current quarter at 4.0M, which is 5.70% of the company's 70.22M share float.
10. Giant Interactive Group (NYSE: GA ) : Develops and operates online games in the People's Republic of China. Market cap of $922.26M. Net institutional shares purchased over the current quarter at 5.1M, which is 5.31% of the company's 96.09M share float.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Institutional data sourced from Fidelity.
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