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
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
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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