China Stocks Continue to Decline

Gene Linn |

China Stocks Continue to DeclineDismal economic prospects for China equaled a dismal performance for China stocks this week, with Hong Kong blue chips retreating Friday for the fourth time in five days. Signs of economic weakness in Europe and a pullback by the U.S. market accelerated the decline.

Hong Kong’s Hang Seng Index, which includes numerous big Chinese companies, fell 1.1% Friday to end the week 3.0% lower at 20,669. The index of Chinese companies dropped 1.0% Friday and 5.0% for the week to 10,659. Turnover remained soft Friday.

Recent bad news about the Chinese economy includes a lowering of GDP expectations by the Chinese government and an anemic preliminary manufacturing PMI number for March.

The worry about the slowdown in the Chinese economy, and about the effect it might have on corporate earnings, will hurt market sentiment in the near term, said Ben Kwong, chief operating officer at KGI Asia.

But he said end of the quarter window dressing might support stocks prices. “So we do not expect to see too substantial (a) drop in the coming week,” he told Equities in an email.

Investors have become concerned about corporate governance problems in Chinese private companies, Kwong said, which is pushing funds to large cap stocks.

Among the potential beneficiaries are companies in the export sector, such as port operators and trading companies, he said. These could also gain from the relatively good outlook for the U.S. market.

Chinese banks might get a boost from speculation China will reduce its reserve requirement ratio to help the economy, Kwong said. End


Hong Kong Blue Chips: -233, -1.1%, to 20,669, 03-23-12, Hang Seng Index

Chinese Stocks in Hong Kong: -109, -1.0%, to 10,659, 03-23-12, HSCE Index

Shanghai Stocks: -1.1% to 2,350, 03-23-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: -4.2, 399.7, 03-22-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong closed lower for the fourth time this week amid worry over slowing Chinese economic growth and signs of weakness in Europe. Big bank ABC (ACGBY) tumbled 3.1% after announcing weaker-than-expected results. But trading company Li & Fung (LFUGY) reported results that beat market expectations and rose 4.2%. KGI Research

Quotable: "In 1Q12, the weak renminbi reflected softening economic fundamentals. However, we expect the ... pickup in economic activity in 2Q12 to lead to a 3% appreciation of the currency in 2012." CCB International. 3-21-12

Chinese Company to Watch: "Minsheng Bank (CMAKY) Restructuring in 2011 proved effective.Net profit attributable to equity holders grew 58.81% YoY to RMB27.92bn in 2011, while diluted EPS was RMB1.05, 3.3% above our forecast and much better than consensus,..." BOCOM International. 3-23-12

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

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of 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:


Symbol Name Price Change % Volume
PCC PMC Commercial Trust n/a n/a n/a 0


Emerging Growth

Lithium-X Energy Corp.

Lithium X Energy Corp is engaged in exploring and developing lithium resources. Its projects portfolio includes Albemarle's Silver Peak brine evaporation pond project.

Private Markets


Airbnb is a community marketplace for people to list, discover, and book unique accommodations around the world — online or from a mobile phone. Whether an apartment for a night,…


D-Wave Systems is the first quantum computing company. Its mission is to integrate new discoveries in physics, engineering, manufacturing, and computer science into breakthrough approaches to computation to help solve…