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China Stocks Look Sideways After 3-Day Losing Streak

Cheng Lei|Reporter, CNBC Asia Pacific
Tuesday, 15 May 2012 | 10:08 AM ET

China stocks are likely to trade sideways after a three-day losing streak.

Stock investors watch stock movement at a stock exchange in Chengdu, China.
AP
Stock investors watch stock movement at a stock exchange in Chengdu, China.

The Shanghai Composite lost 0.25 percent on Tuesday to end at 2374.84, the lowest level in nearly a month. Another fall in China's FDI and the global stocks rout hurt sentiment, but abundant liquidity helped the index narrow losses in the afternoon session.

Market Factors:

Hong Kong's Ming Pao newspaper reports that China may lower the entry barrier for mainland investors to buy Hong Kong stocks as early as July. The potential exodus of 400 billion yuan ($63 billion) of funds would be a negative for the A-share market.

Reports of the securities regulators easing investment restrictions for insurers and Qualified Foreign Institutional Investors will continue to support sentiment.

Stocks to Watch:

Railway Stocks - The Ministry of Railways says fixed-asset investment for the industry in the January through April period fell 48 percent year-over-year to 89 billion yuan ($14 billion).

Power-Transmission-related Stocks - State media reports China will spend 45.2 billion yuan ($7 billion) to upgrade power grids in rural areas this year.

—By Cheng Lei, CNBC Asia Pacific