2010-10-07

China back from vacation, rare earths run


I'm looking at gold mining stocks to compare A-shares to H-shares, as China returns from vacation today. Lingbao Gold (3330) has been on a tear, up 30% in the past week including today's move, but it appears the A-shares aren't doing any catching up today, only pacing Lingbao.

I included China Rare Earth (0769) because that stock continues to catch a bid on monster volume. The relative performance versus Molycorp (MCP) is looking much better now. Since Yahoo has difficulty with the time difference, I had to create a chart comparing the prices. China Rare Earth includes today's intraday gains as of around noon in Hong Kong. This will be an interesting relationship going forward.

China Rare Earth and Lingbao Gold are both up more than 30% this week, with only a few hours left in trading. China Rare Earth has spiked before and I've seen shorter spikes occur before, only to watch them almost completely fade away in the ensuing days and weeks. Whether this rally is connected to the politics of the region (with China supposedly slowing rare earth exports to Japan during the brouhaha over the detained sea captain) or the expectation of currency devaluation (the similar move in Lingbao suggests the latter) could mean the move is more permanent, but I still expect a healthy and sizable pullback.

No comments:

Post a Comment