China Stocks Dip on Euro Debt Concerns

Gene Linn |

China stock marketChina stocks are stuck in a narrow range for now, pulled up by prospects of credit easing in China and down by an unending flow of bad news about Europe’s debt crisis.

The result Tuesday was a 0.8% drop in Hong Kong’s Hang Seng Index following a substantial rise Monday. The index of Chinese companies declined 0.7% Tuesday.

“…(M)ost blue chips are just range trading while turnover is thin, as most investors stay on the sideline,” Ben Kwong, chief operating officer at KGI Asia, told Equities in an email. He noted that much of Tuesday’s modest volume was taken up by sales of mainland banks by overseas strategic shareholders.

The market is likely to continue range trading for awhile due to the anticipation of new share offerings and further share placements, according to Kwong.



“ For individual stocks, we expect China plays continue to outperform,” he said. Strong performance in the Mainland’s A-share markets indicates insurance companies are attractive. And the Chinese government is expected to launch policies to support selective sectors like energy, Kwong said, and companies in these sectors will probably see speculative interest in the short term. End

DAILY FIX

Hong Kong Blue Chips: -160, -0.8%, to 19,348, 11-15-11, Hang Seng Index

Chinese Stocks in Hong Kong: -80, -0.7% to 10,638, 11-15-11, HSCE Index

Shanghai Stocks: +0.04%, 2,530, 11-15-11, Shanghai Composite Index.

Chinese Stocks in the U.S.: -2.1, to 391.3, 11-14-11, Bank of New York Mellon, ADR Index-China

Insight: China stocks in Hong Kong slumped Tuesday after rising bond yields in Italy and Spain caused a decline on Wall Street. Volume was thin as blue chips continured to range trade. Bank of America sold a large stake in giant Chinese bank CCB (CICHY) as expected, but the sale seemed to remove uncertainty from the stock and CCB gained 1.1%. KGI Research

Quotable: "Evergrande (3333.HK) announced that contracted sales value for October dropped 6% compared to the previous month, the first ... decline since February 2010, reflecting a slowdown in property sales in the second and third tier cities. We recommend investors to underweight Chinese property developers." Guoco Capital. 11-15-11

Chinese Companies to Watch: "Media reported that PRC government would roll out industry policies that favor green play like China Everbright Int’l (0257.HK)." Guoco Capital. 11-15-11

Brokerages and analysts cited 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

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