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There is considerable dispersion in year-to-date returns for the Hang Sang China Enterprises Index. The big gainers are disproportionately infrastructure companies: Guangdong Investment, China Railway, CNOOC, China Petroleum, Anhui Conch Cement, Petrochina. The losers are financials (insurers and brokers) and automakers).

This suggests that investors believe that infrastructure investment will pick up from recent lows.

I also observe that iron ore imports are accelerating as of August, which suggests that China is preparing for more infrastructure spending.

China materials imports

Shanghai Composite members with the highest correlation to industrial metals are also outperforming, further suggesting that Chinese investors expect infrastructure spending to recover.

r-squared=44%, t-statistic = 5.1