16 AUGUST 2012emergingmoney.com
Aluminum Corp. of China stocks look promising despite low trading
Edited by : AL CIRCLE
2 min read
Most Asian equities traded lower on Monday as the result of a dearth of major global data points over the weekend. On Chinese exchanges, Aluminum Corp. of China (ACH, quote) was no exception, leading shares in Hong Kong (EWH, quote) downwards.
Both Hong Kong and Mainland Chinese indices (FXI, quote) traded lower on Monday. The Shanghai Composite was the biggest mover to the downside, falling almost a percent. Hong Kong followed its norther neighbor’s lead, dropping a third of a percent.
Chinese exchanges were adversely affected due to the lack of news over the weekend; traders were hoping that Beijing would announce new plans to stimulate the economy. However with the government not announcing any new measures, many stocks performed poorly.
ACH was one such stock. Its poor performance Monday was of little surprise given how well-positioned it is to benefit from increased government investment in infrastructure projects. Conversely, given no new announcements made pertaining to public works projects, ACH tends to trade poorly.
The company’s Hong Kong-listed shares fell 2.07% in Monday trading.
While ACH’s shares have performed poorly recently, there’s reason to believe it could recover at some point over the next six months. The stock is down almost 40% year-to-date. Obviously the company is very exposed to fluctuations in the price of aluminum.
However, given that many economists predict the Chinese economy will bottom in the second half of 2012, it stands to reason that both aluminum prices and the share price of ACH may recover as well.
Although the stock has fallen substantially over the past year, ACH does not look awful technically. If the stock is able to find support here around its 100-day moving average, it’s reasonable to assume that ACH may test its 200-day moving average in the near future.
Both Hong Kong and Mainland Chinese indices (FXI, quote) traded lower on Monday. The Shanghai Composite was the biggest mover to the downside, falling almost a percent. Hong Kong followed its norther neighbor’s lead, dropping a third of a percent.
Chinese exchanges were adversely affected due to the lack of news over the weekend; traders were hoping that Beijing would announce new plans to stimulate the economy. However with the government not announcing any new measures, many stocks performed poorly.
ACH was one such stock. Its poor performance Monday was of little surprise given how well-positioned it is to benefit from increased government investment in infrastructure projects. Conversely, given no new announcements made pertaining to public works projects, ACH tends to trade poorly.
The company’s Hong Kong-listed shares fell 2.07% in Monday trading.
While ACH’s shares have performed poorly recently, there’s reason to believe it could recover at some point over the next six months. The stock is down almost 40% year-to-date. Obviously the company is very exposed to fluctuations in the price of aluminum.
However, given that many economists predict the Chinese economy will bottom in the second half of 2012, it stands to reason that both aluminum prices and the share price of ACH may recover as well.
Although the stock has fallen substantially over the past year, ACH does not look awful technically. If the stock is able to find support here around its 100-day moving average, it’s reasonable to assume that ACH may test its 200-day moving average in the near future.
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