Investors are waiting for more news from the European Central Bank and U.S. Federal Reserve Board about another possible release of cash into the struggling world economy.
Hong Kong’s Hang Seng Index fell 0.7% to 19,430, and the index of Chinese companies tumbled 1.0% to 9,196.
Fed Chairman Ben Bernanke’s statement Friday that the bank was open to providing more economic stimulus was expected and gave the market little support, according to Jackson Wong, vice president of sales at Tanrich Securities.
Investors are still on the sidelines waiting for an ECB meeting on monetary policy on Thursday and release of U.S. unemployment figures Friday, he told Equities in an email. News from these events will be key factors for the rest of the month, Wong said. The market thinks weak U.S. job numbers would increase pressure on the Fed to launch another round of quantitative easing.
Meanwhile defensive plays like Link REIT (823, HK) are rising. Hong Kong properties are stabilizing after the government announced unexpectedly favorable policies. ”… I think they might be the leaders on the next up trend since they are both defensive and benefit from any easing policies from central bankers,” Wong said.
He also noted: “Chinese cements and properties are rebounding on hope China might reduce interest rate soon to boost the economy and bottom fishing since they are at the low end of their trading range. However, any rebounds in any sectors seem to be relatively short term and news driven.” End
Hong Kong Blue Chips: -129, -0.7%, to 19,430, 09-04-12, Hang Seng Index
Chinese Stocks in Hong Kong: -92, -1.0%, to 9,196, 09-04-12, HSCE Index
Shanghai Stocks: -16, -0.8% to 2,044, 09-04-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: -1.7, 364.7, 08-31-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong continued to fall in very light trading, with losses expanding late in the day. Macau gambling plays were mixed after revenue for August hit the low end of expectations. Sands China (SCHYY) gained 1.4%. KGI Research
Quotable: "[The] dull trading pace in August may revive in early September as stock markets may react rigorously on the Jackson Hole meeting (31st August), the ECB monetary policy meeting (6th September) and the Fed two-day policy meeting (starting on 12th September). In addition, investors should closely monitor the release of the US unemployment rate next Friday, which may offer hints on he likelihood of QE3. The HSI is expected to find its support level at 19,300 next week." BEA Securities. 8-31-12
Chinese Company to Watch: Dongfeng Motors (DNFGY) "Maintain BUY given the attractive valuation and still solid long-term outlook." UOB Kay Hian. 9-3-12
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
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