China stocks drifted lower when the Hong Kong market re-opened Wednesday from the Christmas holiday amid mixed signals from world economies and uncertainty over the European debt crisis.
The blue-chip Hang Seng Index fell 0.6% to 18,519, and the index of Chinese companies sank 1.5% to 9,981. Holiday season trading was about half the usual volume.
Although A-shares on the Mainland rebounded in late trading Wednesday to post a small gain, they have been traveling downward for months now as Chinese economic growth slows.
“A-shares’ continuous weakness is weighing on the overall sentiment in the market,” Jackson Wong, vice president for equity sales at Tanrich Securities, told Equities in an email.
Europe’s economic problems are also discouraging investors, but recent news from the U.S. has been encouraging. “The US is the bright spot here … giving hopes to the world that while China is slowing and Europe is struggling, the US economy is picking up rather nicely,” Wong said.
Hong Kong was also waiting to see if Italy’s bond auction might signal some relief from worries about Europe’s debt woes. Lower yields might give the market a “nice boost”, but bad results might bring risk assets, including China stocks, under short-term pressure, according to Wong.
One relatively bright area Wednesday was the shipping sector, he said, largely due to improved economic data from the U.S. Hong Kong properties are also holding their own on the back of resilient apartment prices and an easing of government attempts to cool the property market. End
DAILY FIX
Hong Kong Blue Chips: -110, -0.6%, to 18,519, 12-28-11, Hang Seng Index
Chinese Stocks in Hong Kong: -152, -1.5% to 9,981, 12-28-11, HSCE Index
Shanghai Stocks: +0.2%, 2,171, 12-28-11, Shanghai Composite Index.
Chinese Stocks in the U.S.: -1.7, to 359.5, 12-27-11, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong reopened lower Wednesday in line with declines in Chinese and Asian markets. A modest turnaround in Chinese A-shares did not reverse the trend in Hong Kong, and blue chips ended lower in sparse holiday turnover. Dairy product maker Mengniu (CIADY) plunged due to quality control problems. KGI Asia
Quotable: “If the 20-day MA can hold and the total turnover rebounds back to HK$60bn, the chance for a better outlook will be possible.” Core Pacific Yamaichi. 12-28-11
Chinese Company to Watch: “Short term investors may consider to take profit on Dongfeng Motor (DNFGY) which is approaching an overbought condition.” Guoco Capital. 12-28-11
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
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