China stocks marked time Wednesday as the Hong Kong market re-opened after a holiday, but Mainland exchanges remained closed until next Monday.
Hong Kong’s Hang Seng Index edged 0.2% higher to 20,888 in weak turnover. The index of Chinese companies ended 0.03% lower at 9,828.
Lack of direction from China will put a damper on trade this week, but there are some developments investors are paying attention to.
One was the fact that late last week China finally set a date, November 8, for the start of the Communist Party Congress to install new leaders to address serious economic problems. “So, the H shares (Chinese companies) should do well since this will clear some political uncertainties and now the new future leaders can focus more on the economic front.” Jackson Wong, vice president of sales at Tanrich Securities, told Equities in an email.
The market will also keep an eye on Spain’s continuing debt problem, an upcoming European Central Bank meeting and a major jobs report for the U.S. this week.
Wong said he doesn’t expect the Hang Seng to break 21,300 in this shortened trading week, and 20,500 looks like a good support level in the short term.
Lagging Chinese banks may find some buying interest, he said, along with infrastructure stocks like building material producers and high-speed railways. Infrastructure is likely to be a prime target for Chinese economic stimulus measures. End
Hong Kong Blue Chips: +48, +0.2%, to 20,888, 10-3-12, Hang Seng Index
Chinese Stocks in Hong Kong: -3, -0.03%, to 9,828, 10-3-12, HSCE Index
Shanghai Stocks: +30, +1.4% to 2,086, 9-28-12, Shanghai Composite Index. Closed for a holiday.
Chinese Stocks in the U.S.: +0.4, 379.5, 10-2-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong re-opened after a long holiday weekend with some upward momentum intact from last week. Blue chips rose more than 100 points in early trading, but profit-taking trimmed gains. Mainland tourists visiting during China’s week-long Golden Week holiday are spending less than expected, pushing stock prices lower for consumer and Macau gambling plays. KGI Research
Quotable: “Trading volume will likely remain thin for the rest of the week amid the National Day holiday break in the Mainland. Investors may turn cautious ahead of the US Sep payrolls report due on Friday. The HSI should see its next resistance level at around 21,000 points.” BEA Securities. 9-28-12
Chinese Company to Watch: Department store operator NWDS (NWRLY) “Anticipated sales improvement: SSS growth mid-single digit yoy starting from July this year, but anticipated to see improvement in 4Q12 Highly Defensive: Net cash of HK$3.2bn, or HK$2 per share, which is highly defensive. Fairly valued: Currently trading at 11x 2013e P/E, dividend yield of 4%, current valuation is fair.” Core Pacific Yamaichi. 10-3-12
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