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
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
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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
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