China stocks rebounded Wednesday, perhaps starting a short-term sideways shuffle after strong gains in 2012 and at the beginning of this year.
The Hang Seng Index in Hong Kong increased 0.5% to 23,218 in slightly lower turnover after Tuesday’s 0.9% drop, and the index of Chinese companies rose 0.9% to 11,818.
The market has consolidated since its 2.9% surge to 23,312 on January 2, but there doesn’t appear to be much downside. The Hang Seng has remained above its 10-day moving average since early December, and that number is now 23,018.
But for the time being there isn’t a lot of room on the upside either, according to Castor Pang, head of research at Core Pacific Yamaichi.
“The valuation of the Hang Seng is not attractive enough to draw a lot more funds into the market unless there is some good news, like A-shares going over 2,300,” he told Equities. “Otherwise we’ll move sideways.”
A-shares on the Mainland rallied sharply in late 2012, but the Shanghai Composite Index has been stuck below 2,300 recently.
Although the overall China stocks market isn’t moving much, Pang said portfolio rebalancing will help Chinese banks, properties and insurers. End
DAILY FIX
Hong Kong Blue Chips: +107, +0.5%, to 23,218, 1-9-13, Hang Seng Index
Chinese Stocks in Hong Kong: +103, +0.9%, to 11,818, 1-9-13, HSCE Index
Shanghai Stocks: -0.3, -0.03% to 2,275, 1-9-13, Shanghai Composite Index.
Chinese Stocks in the U.S.: -5.5, 407.1, 1-8-13, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong rebounded from Tuesday’s decline in slightly lower turnover. Speculation the Chinese government would aid the energy sector helped alternative energy stocks: HN Renewables (0958, HK) +13.3%. Research
Quotable: “So, When HSI maintained above the 10-day MA, the short-term support did not break…. So, we expected that HK market will maintain a seesawing situation and won’t trigger a sustainable drop.” Core Pacific Yamaichi, 1-9-13
Chinese Company to Watch: Gas, water and other metering products-maker Wasion (0393, HK) “Wasion is still trading at 8.8x 2012PE and prospective yields of 4.7%, which looks attractive given a broadbased market rally.” UOB Kay Hian. 1-9-13
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 http://www.adrbnymellon.com/dr_country_profile.jsp?country=CN
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