The China stock market gateway of Hong Kong ended a week of bumpy trading pretty much where it began after posting moderate gains late in the week. But with little direction or momentum apparent in Hong Kong stocks, investors should be wary of an imminent downturn.
Stocks started the week off solid gains the previous Friday afternoon and promptly sank almost 1%. A turnaround at midweek erased most of the losses for the blue chip Hang Seng Index. It finished the week down 0.3%, 77 points, to 23,199. The index of Chinese companies added 0.4%, 54 points, to 12,948.
Turnover stayed weak and the market swung back and forth on news from outside Hong Kong. “We’re taking our lead from the U.S. economy, European debt worries and of course the Chinese interest rate and inflation,” Howard Gorges, vice chairman at South China Brokerage, told Equities. “Uncertainty will remain for awhile.”
Part of the gains late in the week came from covering of sizeable short positions taken earlier by traders, according to Gorges. He said the gains probably won’t go too far before profit-taking sets in.
Market leaders were big Chinese banks and energy-related companies, Gorges said, following cues from Chinese economic news and international commodity markets. And by the end of the week, some large Mainland property firms rose. End
Hong Kong Blue Chips: +36, +0.2%, to 23,199, 05-20-11, Heng Seng Index
Chinese Stocks in Hong Kong: +12, +0.1% to 12,948, 05-20-11, HSCE Index
Chinese Stocks in the U.S.: +1.5 to 434.4, 05-19-11, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong traded in a narrow range in very weak turnover after Chinese stocks posted minimal gains in the U.S. overnight. KGI Research
Quotable: "Market View – Range trade pattern still persists between 22,500 and 23,500." BOCOM International. 5-20-2011
Chinese Companies to Watch: "BOSHIWA INT'L 01698) Mainland largest high end child apparel company, will speed up its retail outlet expansion to boost its earnings." KGI Asia. 5-19-2011
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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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