Cold statistics and hopeful speculation pushed China stocks to their highest close for the year in Hong Kong for the fourth time this week.
On Friday the Hang Seng Index climbed 0.7% to 22,606 in more active trading, capping a 1.9% rise for the week. The index of Chinese companies, the H shares, jumped 1.5% to 11,307, up 3.6% for the week. And speculation an important Chinese economic policy meeting scheduled for Saturday would launch new economic stimulus measures drove A-shares on the Shanghai Composite Index to a massive 4.3% leap to 2,151.
The surge in A-share prices was one factor behind Fridays gains in Hong Kong. On the statistical front a rise in the preliminary PMI figure for China’s manufacturing sector to its highest level in 14 months helped spur the latest stock gains. The encouraging figure fit into the market view that the Chinese economy is rebounding after growth declined for seven quarters.
The Hang Seng’s strong rise, 3.7% since December 5, might lead to a brief consolidation, according to some analysts. But after a short pause stocks will be poised to move up again, according to Peter So, managing director and co-head of research at CCB International.
“There is still upward momentum because investors expect China will cut banks’ RRR (reserve requirement ratio) in January,” he told Equities, “and loan flow is always high in January.”
Investors are likely to be in a buying mood in the last week of December to position themselves for a liquidity-driven January rally, So said.
The main beneficiaries of the RRR cut will be banks and brokerages, he said. End
Hong Kong Blue Chips: +160, +0.7%, to 22,606, 12-14-12, Hang Seng Index
Chinese Stocks in Hong Kong: +164, +1.5%, to 11,307, 12-14-12, HSCE Index
Shanghai Stocks: +89, +4.3% to 2,151, 12-14-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: -2.6, 385.9, 12-13-12, Bank of New York Mellon, ADR Index-China – closed by storm
Insight: Hong Kong opened 49 points lower after recent gains but surged to another high close for the year on the back of a huge leap in Mainland A-shares. Insurers and brokerages led the way: China Life (LFC) +6.2%, CITIC Securities (CIIHY) +4.8%. KGI Research
Quotable: “We believe that HSI will not see a huge downside in the short term and will continue to rebound slowly.” Core Pacifc Yamaichi. 12-14-12
Chinese Company to Watch: China Suntien (956, HK) “Suntien Green Energy (SGE)’s main business is clean energy including natural gas and wind energy. In the first half of 2012, its operation performance showed stable performance, its 3 sectors` growths are all remarkable.” Phillip Securities. 12-14-12
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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