China Stocks Continue Rebound as Jewelers Shine

Gene Linn |

Chow Tai FookJewelers with a pipeline to China’s coveted high-end consumer market are among the big gainers as China stocks continued to bounce back Tuesday after three weeks of sharp losses.

The rebound is fueled by renewed hopes of a settlement of the European debt crisis after the IMF reportedly offered to lend money to debt-strapped Italy. European finance ministers are meeting this week to discuss other measures to address the crisis.

“Optimism that European leaders might reach solutions in the coming meeting is expected to provide support to HK stock market in the near term…,” Ben Kwong, chief operating officer at KGI Asia, told Equities in an email.

The fact that American shoppers started the holiday season last week with a spending spree is also supporting stocks.

After tumbling 11.6% the previous three weeks, Hong Kong has posted two days of solid gains. On Tuesday the Hang Seng Index rose 1.2% to 18,256, and the index of Chinese companies increased 1.1% to 9,714. Turnover remained thin, indicating investors are not betting the ranch on a solution to the European debt problem.

While the market is on the upswing, interest is turning to jewelers, according to Kwong.

Stocks that reach China’s increasingly affluent consumers have long been a favorite, and the approaching IPO of major jeweler Chow Tai Fook is putting the spotlight on companies with extensive jewelry sales in China. Chow Tai Fook is expected to start trading in mid-December.

Meanwhile, Kwong noted, listed jeweler Luk Fook (0590.HK) just announced encouraging interim results, possibly triggering speculation of robust results in the sector. End

DAILY FIX

Hong Kong Blue Chips: +218, +1.2%, to 18,256, 11-29-11, Hang Seng Index

Chinese Stocks in Hong Kong: +104, +1.1% to 9,714, 11-29-11, HSCE Index

Shanghai Stocks: +1.2%, 2,412, 11-29-11, Shanghai Composite Index.

Chinese Stocks in the U.S.: +12.5, to 369.4, 11-28-11, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong rose for the second day in a row following big gains by Chinese stocks listed in the U.S. However, turnover was thin as investors seemed to adopt a wait-and-see attitude toward efforts to solve Europe's debt crisis.

Quotable: "We believe Hang Seng Index may test 19,000 in near-term, as the softening of US dollars and lower shortselling ratio are both positive signs to the market." Guoco Capital. 11-29-11

Chinese Companies to Watch: "We recommend short-term investors to chase cyclical stocks such as Jiangxi Copper (JIXAY), Zijin Mining (ZUMY), Anhui Conch (AHCHY), Dongfeng Motor (DNFGY), China Coal (CCOZY) and China Shipping Development (CSDXY)." Guoco Capital. 11-29-11

Brokerages and analysts cited 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 http://www.adrbnymellon.com/dr_country_profile.jsp?country=CN

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
MIDD The Middleby Corporation 137.52 0.34 0.25 487,053

Comments

Emerging Growth

AfterMaster Inc

Studio One Media Inc is a diversified media and technology company. It is engaged in the development and commercialization of proprietary, edge audio and video technologies for professional and consumer…

Private Markets

Ozobot by Evollve Inc

Ozobot is a world leader in compact super intelligent robots that entertain and educate through fun interactive gaming.

Pinterest

Pinterest is a visual discovery and planning tool. Users ("Pinners") use the site and apps to get ideas for their future, such as recipes, places to travel, and products to…