Bernanke Speech Lifts China Stocks

Gene Linn |

Ben Bernanke’s breathlessly awaited statement on Friday about launching more U.S. economic stimulus measures was a less-than-resounding “maybe.” But that was enough to allow China stocks in Hong Kong to rise along with other global shares.

The Federal Reserve Board Chairman’s decision Friday not to start another round of quantitative easing of monetary policy , QE3, might disappoint a lot of people, Jackson Wong, investment manager at Tanrich Securites, acknowledged. But he saw two positives from Bernanke’s speech. First he showed some confidence that the U.S. economy was still recovering, albeit slowly. And secondly there is still a chance for more stimulative measures to be launched at the September 20 Fed meeting if economic statistics sag.

Those positives were enough to help Chinese stocks open sharply higher in Hong Kong on Monday and stay at that level in thin trading. The blue chip Hang Seng Index closed 1.4% higher at 19,865.

Another positive heading into this week, Wong said, is large cap and blue chip stocks have announced excellent earnings as the interim reporting season winds down. But some smaller cap stocks and industrials struggled due to economic tightening in China and lagging demand from Europe and the U.S.

“I can say the (Hong Kong) market should still be trading between 19000 to 21000 next week with large caps being favorites, such as China bank stocks, (Hong Kong) bank stocks,” Wong told Equities in an email.

He also said once the Hang Seng stabilizes around 20,000, recently downtrodden sectors such as Chinese cement producers and Macau gambling plays will attract speculative buying interest. End

DAILY FIX -- China Stocks Higher in Hong Kong in Thin Trading

Hong Kong Blue Chips: +282, +1.4%, to 19,5865 08-29-11, Hang Seng Index

Chinese Stocks in Hong Kong: +212, +2.1% to 10,512, 08-29-11, HSCE Index

Shanghai Stocks: -1,4%, 2,575, 08-29-11, Shanghai Composite Index.

Chinese Stocks in the U.S.: +2.7 to 389.4, 08-26-2011, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong stocks opened sharply higher following the announcement Friday by U.S. Federal Reserve Board chairman Bernanke that the Fed might launch new measures in September to stimulate the U.S. economy. However, stocks moved little in thin trading after the opening, reflecting lack of strong buying interest. Chinese Construction Bank, CCB (0939), rose 4.9% on news the Bank of America is in talks with institutional buyers and sovereign funds to sell shares in the Chinese bank. That means it looks like B of A's CCB shares will not be dumped on the stock market. KGI Research

Quotable: "HK stock has limited downside potential in terms of valuation, but valuation is not an effective tool to predict market movement and market is more sensitive to news and rumors.... We think range trade pattern may persist this week at 18800-20800." BOCOM International. 8-28-2011

Chinese Company to Watch: Belle (1880) "For the long-term prospect, the company plans to expand into new business areas, including mass market women’s footwear, the men’s footwear market, kid’s footwear market, multi-brand store and one-line business. Management expects these to be the growth driver for the next 3-5 years." Guoco Capital. 8-26-2011

Brokerages and analysts cited 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

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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