Tags: Parker | rebound | China | stocks

Morgan Stanley’s Parker Sees Rebound in China Stocks

By Dan Weil   |   Tuesday, 04 Dec 2012 09:01 AM

Chinese stocks, which just hit an almost-four-year low, are due to rebound, says Adam Parker, chief market strategist for Morgan Stanley.

"Long term, whether the actual economy in China is growing 3, 4, 5, 6 or 7 percent, all of these are faster than the U.S., Europe and Japan are growing," he wrote in a note obtained by CNBC.

"So, our judgment is that negativity on China is quite high and that there is potential for more optimistic news on the policy front over the next few months."

Editor's Note: The Final Turning Predicted for America. See Proof.

The Shanghai Composite Index fell 1 percent to 1,959.77 Monday, putting its drop for the year to date at 11 percent.

As for China’s economy, it expanded 7.4 percent in the third quarter, and many experts believe the government will maintain its 7.5 percent growth target next year.

To be sure, Parker isn’t going all in on Chinese stocks. "We are 'chicken China' bulls. We don't have enough confidence in a fundamental recovery to jump in and buy beaten-down materials and metals,” he wrote.

“This is more of a trading and sentiment call about what is discounted, not a China bottom call.”

Technical analyst Tom DeMark isn’t a timid China bull. He predicts the Shanghai index will soar 48 percent within nine months — to 2,900.

“Everyone is negative on [the Shanghai] index, absolutely everyone,” he told Bloomberg. “Now is the perfect environment to make a low and be positive as the last seller, figuratively speaking, has sold.”

Editor's Note: The Final Turning Predicted for America. See Proof.

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