China's Economic Rebound Fuels the Hang Seng's Weeklong Gains

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

The Hang Seng (UNKNOWN: ^HSI  ) stock index in Hong Kong might be rebounding here at the end of 2013, but is China itself ready to bounce back as a profitable target for investors? The Hang Seng's teetered between gains and losses in the latter half of the year after starting 2013 off with poor performance, and the index picked up another 1.6% this past week to continue its recent run.

But the Hang Seng's not the only part of China that's looking up for investors. Growth investors have long kept an eye on the country's many growth sectors, such as solar power firms like Yingli Green Energy (NYSE: YGE  ) , and Trina Solar (NYSE: TSL  ) . China's economy is picking up steam, but will investors in these firms, and other growth picks across the Pacific, benefit in the long run?

Will China's growth even out?
China reported its third-quarter economic figures on Friday, and the country didn't disappoint after a half year of doing just that. The Chinese economy picked up by 7.8% year over year for the quarter, a slight increase from the 7.5% mark it notched in the second quarter. That was enough to send the Hang Seng up by a full 1% on Friday.

However, the real question for investors who are worried about China's outlook is whether or not the world's second-largest economy can sustain that type of growth. Higher government spending was responsible, in part, for the third-quarter success. Beijing's minor stimulus effort, in reaction to a downturn in demand for Chinese goods, helped, but consumption was only responsible for just around 45% of the economy's growth. Trade, another key cog of China's growth story, barely moved the needle at all.

That's not the way to maintain the long-term growth projections that Beijing has touted. Fortunately, the country is making moves to shore up its trade data, at least. Beijing agreed with the European Union on Friday to negotiate tearing down investment restrictions, and deciding on clearer business guidelines after a brief trade spat brewed between the two regional powers earlier in the year. China is one of the EU's largest trading partners, and revving up exports to European nations will help China's own trade data get back to what investors are used to.

A successful negotiation between the two powers will also help Chinese solar-panel companies. China's solar firms took center spotlight in that earlier trade spat, as Europe accused them of selling their goods below cost. While Europe eventually ironed out a deal with China over the solar firms, a better economic relationship between the two political blocs will keep investors from having to keep one eye on the relations between Beijing and Brussels at all times.

Deutsche Bank certainly thinks so. The German financial leader raised its price target on both Yingli Green Energy and Trina Solar this past week, citing strong long-term demand across the globe for solar panels. Deutsche also singled out Chinese domestic demand picking up in the long run for solar, and Yingli and Trina are two of the more obvious candidates to fulfill that market. Beijing has long sought to dominate resources -- its ventures by state-owned oil and energy companies in Africa are great examples of that -- and if the Chinese government believes solar power is a critical piece of its ambitions, it'll turn to companies like these to fulfill its aims.

The stocks of Yingli and Trina have surged this year by triple-digit percentages, growth that will likely give investors pause. However, if Deutsche Bank's predicted demand shows up, the run might just be getting started for these companies and others in the solar sector.

The next great natural resource boom
Is Solar the key to energy's future, or is there an even greater resource out there for investors to capitalize on? The most precious resource in the history of the world isn't gold or oil. In fact, it's more valuable than both of them. Combined. And here's the crazy part: one emerging company already has the market cornered... and stands to make in-the-know investors boatloads of cash. We reveal all in our special 100% FREE report, The 21st Century's Most Precious Natural Resource. Just click here for instant access!

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2690316, ~/Articles/ArticleHandler.aspx, 9/29/2016 4:43:16 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,143.45 -195.79 -1.07%
S&P 500 2,151.13 -20.24 -0.93%
NASD 5,269.15 -49.39 -0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

1/7/2016 3:01 AM
^HSI $20333.34 Down -647.47 -3.09%
Hang Seng CAPS Rating: No stars
TSL $10.27 Down -0.17 -1.63%
Trina Solar CAPS Rating: **
YGE $3.84 Up +0.03 +0.79%
Yingli Green Energ… CAPS Rating: *