China Stocks Approach Year-high in Hong Kong

Gene Linn  |

China stocks cruised to their eighth consecutive trading day of gains Monday on a tide of inflowing cash, ignoring Friday’s big drop on Wall Street.

The Hang Seng Index in Hong Kong approached its year-high by rising 0.7% to 21,698, and the index of Chinese companies increased 0.6% to 10,743. Moderate volume was restrained ahead of a holiday Tuesday.

Jackson Wong, vice president of sales at Tanrich Securities, said “the Wall Street drop didn’t stop our end’s rise since there are funds flowing in the market with the weak US dollar.”

The market is somewhat overbought after its run-up, Wong told Equities in an email. But he said it should still challenge the year’s high o 21,760 due to the inflow of foreign funds.

Investors are playing “musical chairs,” he said, rotating from one lagging sector to another. They are now leaving big caps to buy infrastructure plays, including cement producers.

“Toll roads and high yield-defensive stocks were being neglected so far, so I do see them as good buys at this point,” Wong said. End


Hong Kong Blue Chips: +146, +0.7%, to 21,698, 10-22-12, Hang Seng Index

Chinese Stocks in Hong Kong: +59, +0.6%, to 10,743, 10-22-12, HSCE Index

Shanghai Stocks: +4, +0.2% to 2,133, 10-22-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: -2.6, 386.9, 10-19-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong opened weaker following a big drop on Wall Street last Friday but climbed into positive terriory after Mainland markets reversed early losses. Turnover was restrained ahead of a holiday Tuesday. Chinese banks, which start announcing results Thursday, were solid: ICBC (FXI) +1.4%. The flow of foreign funds into Hong Kong pumped up local properties: Henderson Land (HLDCY) +2.1%. KGI Research

Quotable: "Hong Kong shares will likely see some correction in the next week following a strong rally, with resistance level at 22,000 points. Nonetheless, the release of third-quarter results of US companies and Chinese banking names will draw focus of investors. Besides, HSBC China Flash Purchasing Managers’ Index will also be due next week." BEA Securities. 10-19-12

Chinese Company to Watch: Sands China (SCHYY) "The Macau gaming companies will be reporting 3Q2012 earnings in November. We expect a strong quarterly performance underpinned by the further development of Cotai Strip." Tanrich Securities. 10-19-12

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.

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