Cautious China Stocks Investors Eye High Yields

Gene Linn  |

Stability is the theme for China stocks after Monday’s tumble, with cautious investors considering high-yield stocks.

Hong Kong’s Hang Seng Index did show some volatility Tuesday, but ended with a modest gain in weak turnover. The Index rose 0.3% to 20,677, and the index of Chinese companies edged 0.06% higher to 10,817.

Investors are looking for results of the U.S. Federal Reserve Board meeting Tuesday and Wednesday and the Fed’s comments on the economy. n upturn in U.S. and European markets could support China stocks in Hong Kong.

But don’t look for a rebound to last week’s 21,000 level for the Hang Seng any time soon, said Conita Hung, head of equities at Delta Asia Financial. “With the European debt crisis weighing on the market, most people are taking a wait-and-see attitude,” she told Equities.

Winning stocks are hard to find in this subdued market. Hung said some investors are turning to companies with strong dividends. China Mobile (CHL) could be one target, despite recent weakness in its stock price.

Chinese banks might also attract attention, according to Hung, because of their high dividends and the fact they have recently fallen more than the market as a whole. End


Hong Kong Blue Chips: +53, +0,3%, to 20,677, 04-24-12, Hang Seng Index

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Chinese Stocks in Hong Kong: +7, +0.06%, to 10,817, 04-24-12, HSCE Index

Shanghai Stocks: +0.5% to 2,389, 04-24-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: -10.6, 396.8, 04-23-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong opened lower after big overnight losses in the U.S. but ended with a small gain in thin, volatile trading. Yanzhou Coal (YZC) dropped 1.9% due to a drop in first quarter profits. KGI Research

Quotable: "In sum, the pick-up of HSBC PMI (in March) was basically in line with our view that “short-term economy is not far away from the bottom level”. BOCOM International. 4-24-12

Chinese Company to Watch: "Xinjiang Xinxin Mining (XJXNY) Indonesia’s nickel ore exports ban could drive up China’s nickel cathode pricesTherefore, the ban would cause a shortage of nickel metal raw materials in China and lift the prices of electrolytic nickel. Since nickel cathode accounts for 72% of the company’s total revenue, we believe Xinxin mining will benefit from the increase in nickel prices." BOCOM International. 4-24-12

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

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily 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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