China stocks traded in a narrow range Monday in Hong Kong and turnover slowed to a crawl to start what looks like a quiet week.
The Hang Seng Index slipped 0.3% to 20,081, and the index of Chinese companies fell 0.9% to 9,815.
This week stocks should hold on to most of the gains from a recent rally, said Jackson Wong, vice president of sales at Tanrich Securities. Even though companies involved in trade with Europe are suffering, he said, the market is supported by solid gains by big caps and the hope for additional economic stimulus from Europe and China.
The Hang Seng should trade between 19,800 and 20,300 this week, Wong told Equities in an email.
He doesn’t expect any surprises from results from two big companies this week, Internet firm Tencent (TCEHY) and China Mobile (CHL). But he is looking forward to results from Chinese banks CQRC (3618) and Minsheng (CMAKY) toward the end of the week. Results from China’s “Big Four” banks will start coming next week.
“Investors will be able to see how big an impact those asymmetrical rates cuts have … on the banks…,” Wong said. “We … would like to see … the loan growth, bad debts, and capital adequacy situation from their management’s view. Before that, lots of people will sit on the side line (waiting) for these big caps.” End
Hong Kong Blue Chips: -55, -0.3%, to 20,081, 08-13-12, Hang Seng Index
Chinese Stocks in Hong Kong: -91, -0.9%, to 9,815, 08-13-12, HSCE Index
Shanghai Stocks: -33, -1.5% to 2,136, 08-13-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +1.2, 383.7, 08-10-12, Bank of New York Mellon, ADR Index-China.
Insight: Hong Kong opened higher on the heels of gains in the U.S. Friday, but drifted lower after Mainland markets slumped. Turnover was very weak, reflecting investors’ caution. China Resources Cement (CARCY) dropped 5.9% after reporting worse-than-expected results. KGI Research
Quotable: “Looking ahead, sentiment should generally stay positive following the subdued Chinese manufacturing and inflation data, which backed market expectations for further stimulus in the PRC. We see the HSI to trade above 20,000 next week.” BEA Securities. 8-10-12
Chinese Company to Watch: Macao Casino operator SJM (880, HK) “Based on our current assumptions, we assume SJM will maintain dividend payout ratio at 75% in the future, which imply the stock would offer over 6% dividend yield in the coming three years.” UOB Kay Hian Holdings. 8-13-12
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For a list of Chinese companies sold in the U.S. and information on each company go to http://www.adrbnymellon.com/dr_country_profile.jsp?country=CN