China Stocks Big Rally Fades

Gene Linn  |

Gold and cement look like two sectors that could advance this week in a market that still lacks direction.

Friday’s big boost from Europe’s new bond-buying scheme was a one-day wonder as Hong Kong’s Hang Seng Index inched up 0.1% Monday to 19,827 after trading in a narrow range. A share placement by big bank CCB pushed turnover higher. The index of Chinese companies slipped 0.4% to 9,394.

“We are in the waiting game again,” said Jackson Wong, vice president of sales at Tanrich Securities.

Investors are looking for direction this week from a German court on plans to deal with the European debt crisis from a speech by Federal Reserve Chairman Ben Bernanke on the chances for another round of monetary easing. Wong told Equities in an email they also wonder when China will act again to loosen monetary policy in response to worse-than-expected economic statistics.

In the meantime, Wong said, the announcement of major Chinese infrastructure projects last week will probably continue to push cement and infrastructure stocks higher. Beneficiaries include cement producer BBMC (BBMPY). A big jump in the price of gold will aid gold miners and gold retailers such as Luk Fook Holdings (590, HK). End


Hong Kong Blue Chips: +25, +0.1%, to 19,827, 09-10-12, Hang Seng Index

Chinese Stocks in Hong Kong: -31, -0.4, to 9,394, 09-10-12, HSCE Index

Shanghai Stocks: +7, +0.3% to 2,134, 09-10-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: +3.5, 362.6, 09-07-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong opened higher after Friday's big rally but traded in a narrow range to end the day only 0.1% higher. A surge in gold prices helped mining stocks: Zhaojin (ZHAOY) +3.7%. KGI Research

Quotable: "For the coming week, investors may eye ... whether the US will announce QE3 (quantitative easing) in the FOMC meeting as well as some key economic data from China such as the consumer price index, retail sales, exports data and new loans etc. The HSI will likely see resistance level at around 20,000 points." BEA Securities. 9-7-12

Chinese Company to Watch: Motive battery-maker Tianneng Power International (819 HK) BUY "With the capacity expansion policy continuing, the company plans to boost sales by providing generous rebates to customers." UOB Kay Hian. 9-7-12

First Tractor (FIRRY) "Benefit from government policy to support agricultural sector: The group is market leader which will benefit from government supporting and subsidizes policies on agricultural sector. Fair valuation: The current price implies 6.7x P/E, valuation is fair, investors would consider accumulating for long terminvestment." KGI Asia. 9-7-12

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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