Hong Kong’s Hang Seng Index plunged below the 19,000 support level early in the week, but stabilized in mid-week on the prospect of monetary easing by the U.S. Federal Reserve Board.
Then the index surged 2.0% Friday when the president of the European Central Bank vowed to support the Euro.
For the week the Hang Sang regained the 19,000 level but fell 1.9% to 19,275 in thin turnover. The index of Chinese companies sank 1.8% to 9,399.
Now investors will be eager to see if the central banks come up with strong measures to match high hopes.
“So for the upcoming meeting held on Wednesday (by the Fed) and Thursday (by the ECB), we have to see whether there are sufficient measures to be launched to satisfy the market expectation,” said Ben Kwong, chief operating officer at KGI Asia. “Hence, market would be quite volatile in the later part of next week.”
On the China front, he told Equities in an email, corporate results set for next week will probably be weak due to falling economic growth in China in the first half of this year. But Kwong said the market has basically discounted bad news from the results.
Companies that surprise investors with good results will outperform. “So we need to keep a close eye on individual company earnings and look for buying targets,” Kwong said. End
Hong Kong Blue Chips: +382, +2.0%, to 19,275, 07-27-12, Hang Seng Index
Chinese Stocks in Hong Kong: +188, +2.0%, to 9,399, 07-27-12, HSCE Index
Shanghai Stocks: +3, +0.1% to 2,129, 07-27-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +6.4, 364.0, 07-26-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong rebounded from recent losses after the European Central Bank promised to support the Euro, a pledge that might push more cash into the world economy. Commodity prices rose, helping Chinese oil and gold producers. Oil company CNOOC (CEO) gained 2.8%. KGI Research
Quotable: "Given a rally in U.S. and European stock markets, we expect the Hang Seng Index to open higher today. However, market outlook remains uncertain in near term amid a slowdown in China’s economy." Guoco Capital. 7-27-12
Chinese Company to Watch: "We expect Sunny (Optical, HK 2382) to have positive 1H12 result and beat the Management's guidance of 25% FY12F revenue yoy growth." Core Pacific Yamaichi. 7-27-12
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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
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