Actionable insights straight to your inbox

Equities logo

China Stocks Build on Friday’s Rally

Positives from Europe and China helped China stocks build on last Friday’s big gain when the Hong Kong market reopened Tuesday after a holiday.The Hang Seng Index rose 1.5% to 19,736, and the

Positives from Europe and China helped China stocks build on last Friday’s big gain when the Hong Kong market reopened Tuesday after a holiday.

The Hang Seng Index rose 1.5% to 19,736, and the index of Chinese companies climbed 1.4% to 9,712.

Pressures from the European debt crisis eased significantly after the Euro Summit on Friday. Sticky issues such as the need for Euro bonds remain, but the region’s leaders made strides to recapitalize struggling banks and spur economic growth.

“It’s like we got over the second hurdle after the Greek election (of pro-bailout parties) and we are heading to the right direction,” said Jackson Wong, vice president of sales at Tanrich Securities.

Improved market sentiment might allow the Hang Seng to challenge 20,000, he told Equities in an email.

“However, to sustain above that will need some more work from other central bankers (to stimulate the economy), so it looks like we might eventually consolidate around 19600 after the recent hype,” Wong said.

On the China front, property stocks are strong because of the perception government tightening policies have peaked, according to Wong.

He also pointed out that heavyweights like HSBC and China Mobile are gaining from China’s plans to allow Chinese investors to buy a Hong Kong stocks ETF, significantly opening the Hong Kong market to the Mainland.

And that might be a gift that keeps on giving. “This scheme will be a big plus going forward if the scale and reception in China are getting big,” Wong said. End


Hong Kong Blue Chips: +294, +1.5%, to 19,736, 07-03-12, Hang Seng Index

Chinese Stocks in Hong Kong: +137, +1.4%, to 9,712, 07-03-12, HSCE Index

Shanghai Stocks: +3, +0.1% to 2,229, 07-03-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: -0.8, 367.8, 07-02-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong posted solid gains as weak U.S. manufacturing data seemed to increase the possibility the Federal Reserve Board would take new measures to stimulate the economy. Chinese insurers surged. China Life (LFC) rose more than 4%. On the other hand automakers lost heavily as Guangzhou put a limit on new car sales to ease traffic congestion. Dong Feng (DNFGY) lost more than 4%. KGI Research

Quotable: “The blue-chip index is expected to move sideway and consolidate near 19,200-19,600, as hope for another cut in reserve requirement ratio in China would help support the stock market. Trading volume is expected to stay subdue ahead of the release of key Chinese economic data scheduled on 9th July.” BEA Securities. 6-29-12

Chinese Company to Watch: “China Pharma (1093.HK). Asset injection to lift valuation. China Pharma will acquire from its effective controller the remaining non-listed assets of Shiyao Group,…” BOCOM International. 7-3-12

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

As the markets put the debt ceiling debacle in the rearview mirror, more than a few issues remain open.