China’s Stock-Market Winners Are Loss-Makers, Defaulters and Risky Firms
(Bloomberg) -- If investor tolerance for risk wasn't obvious enough in the surge underway in China's stock market, just take a look at some of February's best performers.
Loss-makers turn big winners
Of the 30 top-performing Chinese stocks last month, 12 companies said they expect to report a loss for 2018. Take CPT Technology Group Co., which said in late January it will likely post a loss of as much as 5.5 billion yuan. In February, its share price more than doubled, surging by a record. Xi'an Tian He Defense Technology Co., which also warned in January that it expects a loss of 155 million yuan in 2018, saw a more than 100 percent gain in its stock price the following month. By comparison, the top 3 companies with the highest net income forecasts gained by 10-15 percent last month.
Defaulters outpace wider gains
Listed companies that defaulted on bonds last year surged in February, with 12 such firms posting an average climb of 34 percent, outpacing the Shanghai Composite Index's 14 percent gain. Chuying Agro-Pastora Group Co., which defaulted on a one billion yuan bond in December after a smaller default in November, saw its shares rise 64 percent in February, its biggest monthly increase since it listed in 2010.
Risky stocks jump
Companies considered high-risk according to a Bloomberg model of default probability also surged last month. Almost 200 such firms saw their stock prices jump by an average 30 percent. Eastern Gold Jade Co. rose 60 percent in February; Anhui Shengyun Environment Protection Group Co. rose 48 percent, while Hunan China Sun Pharmaceutical Machinery Company Ltd. added 45 percent.
NOTE: Bloomberg's quantitative, independent default-risk model calculates company risks based on stock prices, debt profile and cash flows etc. The model doesn't direct take into account government support or policy changes.
To contact Bloomberg News staff for this story: Amy Li in Shanghai at yli677@bloomberg.net;Jing Zhao in Beijing at jzhao231@bloomberg.net;Shuqin Ding in Shanghai at sding28@bloomberg.net
To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net, David Watkins, Magdalene Fung
©2019 Bloomberg L.P.
With assistance from Bloomberg
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
