China Stocks going up in Nov 12

China forcasts their GDP growth to about 8% this year. However their growth in Q1 is only 1.8%. Therefore for the rest of the year, they have to grow about 6.2% more.

The first time they cut their interest rate was from ~6.5% to 6.~6.31%.

The second time they cut further from ~6.31% to ~6%.


China cuts interest rates for the second time in a month
http://www.bloomberg.com/video/china-cuts-rates-for-second-time-in-a-month-neObpBcOQv2O09xvh4CVxA.html


With the cut in interest rates, more companies will start borrowing to expand their businesses. There will definitely be a slowdown in growth in the China economy. However, my view is that in November, china stocks will start to see the effect of the reduced interest rates.

Companies may see more contracts coming in, and old customers being able to pay up for existing contracts.

One example:

Hu An Cable clinches RMB101.3 million contract  

• Group to supply low-voltage aerial bundled cables in largest contract to date with long-time client, Hubei Province Electric Power Company.
• Ability to secure large contract from  provincial power grid demonstrates Group’s increasing reputation outside of its home base, Jiangsu province.  
• Group expects more projects of such scale in coming years. 

Source: 

http://huancable.listedcompany.com/newsroom/20120703_173059_KI3_4D604984906FD28548257A3000335658.1.pdf