Some 131 A-shares’ companies have been added to either Level 1 or Level 2 in terms of trading risk for this month that should indicate an overall positive move in the equity markets.
Such lowest risk ratings usually indicates a company is unlikely to experience downward price swings, and not likely to expose to uninformed large short positions. Its Foreign Investors Rating has highest scoring indicating active foreign investment, and margin trading net off stock lending in the company’s shares is positive that signals active buying.
These ratings on 3,701 A-shares, or 96% of the stock market, excludes new IPOs of less than 6-month and those classified as ‘Special Treatment’, a stock falls under the exchange’s monitoring (potentially be delisted if fails to meet certain parameters). In addition those in the Level 3, 4 and 5 that may carry certain trading risks saw a slight increase of 117 stocks upgraded to a safer zone.
China Knowledge’s Trading Risk Analysis on each individual is a 1-month risk indicator weighed on market-relevant metrics. In addition to conventional technical and trading analysis it includes a tracking of the company’s margin trading, stock lending activities, major shareholders’ shares sales and factors that could affect short-term price volatility. It provides reader an indicative Risk Level from 1 to 5. Level 1 indicating lowest trading risk, and Level 5 is the highest that suggest a company’s shares price could subject to downward swings. This report does not constitute a long or short call of a company's shares.
It is important to note that the Chinese Lunar New Year’s public holidays this month (Feb) has shortened the number of trading days to just fifteen. The shortest trading month for the year. The last ten years also saw an upswing of about 2% on China Stocks Index 300 (CSI 300) in a week after the Lunar New Year’s public holidays, except in 2013 and 2020.
To learn more about the ratings definition of ‘Trading Risk Analysis’ please click on: https://www.chinaknowledge.com/download/TRAdefinition.pdf
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