Buy This Dip in Chinese Plays: China Green Agriculture (CGA), VanceInfo (VIT) and Fuqi (FUQI).

August 31, 2009 by Kenneth Reid

The Shanghai Index is down about 25% in the last few weeks and is testing its 200-day exponential moving average for the second time. Meanwhile, the more mature Hong Kong bourse has been trading sideways for a month. Stocks in Shanghai are no longer the bargains they once were, but they are not over-valued based on Nasdaq norms, which is a reasonable comparison. In my view, the Hong Kong index is likely to be able to retrace at least 50% of its bear market decline, a feat already achieved by the S&P 500. Accordingly, I expect this dip in Asian markets to be buyable. Play it with names with high relative strength and excellent fundamentals such as China Green Agriculture (CGA), VanceInfo (VIT) and Fuqi (FUQI).