China stocks continued their lackluster performance Thursday as the Hong Kong market waits for results from banking giant HSBC (HBC) on Monday to provide direction.
The Hang Seng Index surged over the 250-day moving average on February 15 to close at 21,385. It ended at 21,381 on Thursday in weak turnover, dragged down 0.8% by worry about a Euro Zone recession. The index of Chinese companies fell 0.9% to 11,714.
HSBC likely will have an outsized impact on the Hang Seng, according to Conita Hung, head of equities at Delta Asia Financial. She pointed out that the huge bank accounts for about 15% of the Hang Seng’s value.
“If the HSBC’s results are better than expected, the Index is likely to break above 22,000,” Hung told Equities. “If it’s worse than expected it could fall below 21,000.”
Meanwhile, oil and energy stocks are strong because of the rise in oil prices, Hung said. Other attractive stocks are those expected to get a boost from favorable Chinese government policies to be announced in March at the National People’s Congress.
Hung said new energy and agriculture firms are among those expected to gain. End
Hong Kong Blue Chips: =168, -0.8, to 21,381, 02-23-12, Hang Seng Index
Chinese Stocks in Hong Kong: -109, -0.9, to 11,714, 02-23-12, HSCE Index
Shanghai Stocks: +0.25% to 2,410, 02-23-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +5.1, 414.5, 02-22-12, Bank of New York Mellon, ADR Index-China
Insight: Worry over the struggling Euro Zone economy and rising oil prices dragged Hong Kong down despite a modest gain on Mainland markets. Newly listed stocks performed poorly: Xiwang Steel (1266.HK) closed 19.6% off its IPO price. KGI Research
Quotable: “Market sentiment remains bullish. The rally in second-tier Chinese property stocks is likely to continue in near term. Our short-term target for the Hang Seng Index remains unchanged at 22,000.” Guoco Capital. 2-23-12
Chinese Companies to watch: MGM China (MGM) “The dividend payout is better than market expectation that might boost short term share price performance.” Guoco Capital. 2-23-12
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 http://www.adrbnymellon.com/dr_country_profile.jsp?country=CN