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Agricultural Stocks May Shine in “Choppy” Chinese Market

China stocks ended the week on a dull note after a lower-than-expected January PMI figure showed the Chinese manufacturing rebound is on track, but not picking up speed.The Hang Seng Index in Hong

China stocks ended the week on a dull note after a lower-than-expected January PMI figure showed the Chinese manufacturing rebound is on track, but not picking up speed.

The Hang Seng Index in Hong Kong edged 0.03% lower Friday to 23,722 in reduced turnover, and the index of Chinese companies – H shares — rose 0.7% to 12,215. A surprising boost to a 21-month high on Wednesday, linked to January futures settlement, helped the Hang Seng inch up 0.06% for the week, and H shares gained 0.2%.

“At the current high level the market wants more news before having more gains,” Steven Leung, director of institutional sales at UOB Kay Hian, told Equities.

He doesn’t think the market will get significant news before closing February 11 – 13 for the Chinese New Year holiday. “Overall trading will be choppy ahead of Chinese New Year,” Leung said.

Agricultural plays may do well, he said, after the Chinese government recently announced it would focus on rural economic growth. Leung likes First Tractor (FIRRY) and some fertilizer producers. In addition, Macau hotel bookings are strong ahead of the holiday, which helps gaming stocks. End

DAILY FIX

Hong Kong Blue Chips: -8, -0.03%, to 23,722, 2-1-13, Hang Seng Index

Chinese Stocks in Hong Kong: +82, +0.7%, to 12,215, 2-1-13, HSCE Index

Shanghai Stocks: +34, +1.4% to 2,419, 2-1-13, Shanghai Composite Index.

Chinese Stocks in the U.S.: -1.4, 400.4, 1-31-13, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong blue chips lost ground early when China announced a lower-than-expected January PMI figure but trimmed losses to end the day almost unchanged. Chinese banks rose: Minsheng Bank (1988, HK) +5.6%. KGI Research

Quotable: “We see 24,000 as a strong technical resistance for the Hang Seng Index before the Chinese New Year (Feb. 10).” Guoco Capital. 2-1-13

Chinese Company to Watch: Guotai Junan Int’l (1788.HK) “We prefer small brokers such as GTJA given their higher sensitivity to the rally of the stock market and new income from cross-border businesses. We are optimistic about investment opportunities in brokerage stocks arising from the recovery of trading volume and policy relaxation.” BOCOM International. 1-2-13

Brokerages and analysts cited here have disclaimers on their websites emphasizing their statements are for information only. They do not endorse my blog, and I don’t endorse them.

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