With about half the normal turnover, the Hang Seng Index in Hong Kong slipped 0.2% Thursday to 18,378. The index of Chinese companies edged 0.06% lower to 9,945.
The Hong Kong market, a prime gateway to China stocks, will be closed next Monday and Tuesday for the Christmas holiday and will shut down the following Monday for New Years.
“The next few days will be quiet,” said Peter So, managing director and co-head of research at CCB International. “A lot of investors will be looking for news from different governments, but the news flow will be weak. There won’t be that much to get excited about.”
But there will be some support for Hong Kong and China stocks because investors expect China to take more steps to loosen tight credit policies early next year, he told Equities. They will try to accumulate small amounts of stock if the market falls below around 18,000, he said.
The main targets will be oversold banks and some defensive consumer plays. Infrastructure stocks will also attract interest, So said. That includes stocks in the railroad sector because the government is still lending money to them.
Some of the most attractive consumer stocks will be those at the high end, according to So, including Brilliance (BCAUY), which sells BMWs, and Belle International (BELLY).
But he said a sustained rebound will probably have to wait until the middle of the first quarter in 2012 when the Chinese government pumps out more liquidity and takes other steps to aid its economy. End
Hong Kong Blue Chips: -38, -0.2%, to 18,378, 12-22-11, Hang Seng Index
Chinese Stocks in Hong Kong: +6, -0.06% to 9,945, 12-22-11, HSCE Index
Shanghai Stocks: -0.2%, 2,186, 12-22-11, Shanghai Composite Index.
Chinese Stocks in the U.S.: -4.6, to 353.6, 12-21-11, Bank of New York Mellon, ADR Index-China
Insight: After local blue chips fell on U.S. markets, Hong Kong lost as much as 178 points in early trading, but then erased most losses in very thin trading. Reports showed the four major Chinese banks increased lending in the first half of December, but Chinese banking stocks were mixed. ICBC (FXI) rose 0.4%. KGI Asia
Quotable: "Hong Kong market will likely be range-bound till year end." BOCOM International
Chinese Companies to Watch: Real Estate sector. "We prefer players with larger scale, diversified geographical distribution, defensive financial position or niche market positioning. Our top picks include: Evergrande (3333.HK), SOHO China (0410.HK) and Hui Xian REIT (87001.HK)." Haitong Securities. 12-22-11
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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
Buyers Lurk in Quiet China Stocks Market
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