China stocks shrugged off sharply lower Chinese GDP growth and worries about the deepening debt crisis in Spain to close the week with a modest gain.
Hong Kong’s Hang Seng Index edged 0.1% higher Friday to finish the week up 1.5% to 21,011. The index of Chinese stocks was virtually unchanged Friday and rose 1.0% for the week to 11,050. Turnover was near rock-bottom levels all week, reflecting investors’ caution.
One reason for the rise was investors saw a silver lining in the dark cloud of slower Chinese economic growth: a greater possibility authorities would soon loosen monetary policies to halt the slide.
“This week has been relatively stronger on improving sentiment over the positive earning results and expectation that China might eventually roll out pro-growth policies by the end of April,” said Jackson Wong, vice president of sales at Tanrich Securities.
He told Equities in an email that upward momentum should carry into next week with the Hang Seng challenging resistance at 21,400.
“Financials will still be strong especially insurance stocks because of their good first quarter earnings,” Wong said.
But he warned that industrials will lag behind. Foxconn and other Apple (AAPL) suppliers will suffer from Apple stocks’ decline in the US. End
Hong Kong Blue Chips: +16, +0.1%, to 21,011, 04-20-12, Hang Seng Index
Chinese Stocks in Hong Kong: +3, +0.02%, to 11,050, 04-20-12, HSCE Index
Shanghai Stocks: +1.2% to 2,407, 04-20-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +2.8, 406.4, 04-19-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong opened lower in line with the softer tone in US and European markets, but a rally in Shanghai helped Hong Kong close with a small gain. Turnover remained weak, and blue chips closed down from afternoon highs. KGI Research
Quotable: “We reiterate our positive stance on China stocks and recommend investors to overweight Chinese banks, insurers, property developers and oil stocks.” Guoco Captial. 4-20-12
Chinese Company to Watch: “Anhui Conch (AHCHY) 1Q12 result below consensus – BUY on weakness. Anhui Conch is currently traded at 10.3x 2012 PER, equivalent to 40% discount to its historical average level.” Guoco Capital. 4-20-12
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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