Amid Pre-Holiday Caution, Chinese Insurers, Properties Set to Rise

Gene Linn  |

Caution ruled the day for China stocks Thursday with just one trading day left before a long break for Chinese New Year.

The Hang Seng Index in Hong Kong sank 0.3% to 23,177, and the index of Chinese stocks dropped 1.4% to 11,682. Profit-taking has been chipping away at the Hang Seng since it hit a 21-month high of 23,822 hit on January 31. The Hong Kong market will close for the holiday Monday through Wednesday next week; Mainland exchanges will not open the whole week.

In addition to reluctance to take big positions ahead of the long holiday, investors are cautious in the face of a number of worrying market rumors, said Ben Kwong, chief operating officer at KGI Asia. He pointed to talk that the Chinese government would tighten control of the Macau gaming and Mainland property sectors and that the Hong Kong government would try to restrain rising property prices.

“It is hard to tell the accuracy of those market (rumors), but they are still an excuse for some investors to take profit on the related sectors,” Kwong told Equities in an email.

He prefers sectors that have seen recent substantial declines, like Mainland properties and insurance companies. Sales for property firms are still good, and insurers will gain from the current A-share rally in Shanghai and Shenzhen. “The recent correction might be a good entry for both companies,” Kwong said. End

DAILY FIX

Hong Kong Blue Chips: -80, -0.3%, to 23,177, 2-7-13, Hang Seng Index

Chinese Stocks in Hong Kong: -167, -1.4%, to 11,682, 2-7-13, HSCE Index

Shanghai Stocks: -16, -0.7, to 2,419, 2-7-13, Shanghai Composite Index.

Chinese Stocks in the U.S.: +1.5, 391.6, 2-6-13, Bank of New York Mellon, ADR Index-China

Insight: After opening almost unchanged, Hong Kong blue chips drifted lower while trading in a narrow range ahead of next week's long holiday for Chinese New Year. Analysts' upgrades boosted wind power stocks: CP New Energy (735, HK) +15%. Research

Quotable: "All eyes will be on China’s CPI figure due on Friday." BOCOM International. 2-7-13

Chinese Company to Watch: "We suggest turning more defensive in the short term and switch our top pick from MSB (Minsheng Bank, CMAKY) to BOC (BACHY).

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

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Companies

Symbol Name Price Change % Volume
CCMP Cabot Microelectronics Corporation 94.32 -1.62 -1.69 156,629 Trade

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