China stocks continued to bounce up-and-down but mainly down Thursday with incoming hot money unable to make up for a raft of negative forces. The recent pattern has been for discouraging news to drive stocks down one day followed by a moderate rebound as an inflow of money from abroad goes bargain-hunting.
Thursday was a discouraging one. The Hang Seng Index in Hong Kong sank 1.6% to 21,109 and the index of Chinese companies, the H shares, plunged 2.0% to 10,200.
Big losses on U.S. and Chinese markets, the looming fiscal cliff in the United States and worsening European debt crisis have conspired to knock the Hang Seng down after it surged from 19,145 on September 5 to its year-high of 22,111 on November 2. Technical factors haven’t helped.
“I think we’re going down to 21,000,” said Francis Lun, managing director at Lyncean Securities. “We went above 22,000 in early November and can expect about a 1,000-point correction.”
Chinese banks and natural resources produces are bearing the brunt of the selling pressure, he told Equities.
One of the few bright spots is the appliance-making sector. Lun said investors expect the Chinese government to launch policies to encourage consumers to buy appliances. End
Hong Kong Blue Chips: -333, -1.6, to 21,109, 11-15-12, Hang Seng Index
Chinese Stocks in Hong Kong: -206, -2.0%, to 10,200, 11-15-12, HSCE Index
Shanghai Stocks: -25, 1.2%% to 2,030, 11-15-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: -4.4, 369.1, 11-14-12, Bank of New York Mellon, ADR Index-China – closed by storm
Insight: Sharp declines in U.S. stocks led Hong Kong to open 253 points lower, and losses expanded in slightly higher turnover. Internet firm Tencent (TCEHY) slumped 7.0% due to worse-than-expected results from the third quarter. KGI Research
Quotable: “We maintain our year-end target for the Hang Seng Index at 22,500.” Guoco Capital. 11-15-12.
Chinese Company to Watch: Kunlun Energy (KLYCY) “Traded at 14.3x 2013 PER with 15.8% 2-year EPS CAGR, Kunlun Gas’ valuation is undemanding in our view given its stable business nature.” Guoco Capital. 11-15-12
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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