China stocks resumed their rally Monday, but a bit grudgingly.
Hong Kong’s Hang Seng Index ended up 0.4% at a year-high close of 22,277, but couldn’t maintain early strong momentum in reduced turnover. The finish was just six points above the previous high set last Wednesday. Also on Monday the index of Chinese companies continued to climb, rising 0.7% to 10,994.
China stocks in Hong Kong and overseas have traced the ups and downs of the Mainland’s A-share market the last few weeks, and the Shanghai Composite Index started the week with a 1.1% gain to rise further above the critical 2,000 level at 2,084.
Although stocks seem to be treading water at the new, higher level for now, more gains are in the offing. In addition to the rally in A-shares, foreign funds continue to flow into Hong Kong and Chinese statistics, such as November’s strong rise in retail sales, generally reflect a rebounding economy.
“The market is likely to make new highs and test 22,600 this week … as long as we can hold on above 22,000 this week,” said Jackson Wong, vice president of sales at Tanrich Securities. “Looks like the market is more susceptible to good news than bad news at this point.”
Investors are focusing on real assets and on several themes, he told Equities in an email. Chinese properties have been favorites for awhile, and second and third-tier companies are catching up now.
Natural gas and shale gas stocks continue to rise on the prospect of upcoming projects and the clean energy theme, Wong said. Cement producers and infrastructure plays are also rising. End
Hong Kong Blue Chips: +86, +0.4%, to 22,277, 12-10-12, Hang Seng Index
Chinese Stocks in Hong Kong: +75, +0.7%, to 10,994, 2-10-12, HSCE Index
Shanghai Stocks: +22, +1.1% to 2,084, 12-10-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +0.8, 382.4, 12-7-12, Bank of New York Mellon, ADR Index-China – closed by storm
Insight: Hong Kong opened 180 points higher but could not maintain the strong momentum. Blue chips still closed six points over the previous year-high set last Wednesday. Lagging properties continued to rise: China Evergrande (3333, HK) +3.5%. A rally in Mainland A-shares boosted insurers and brokerages: Citic Securities (6030, HK) +2.0%. KGI Research
Quotable: “The HK stock market is expected to remain bullish in the near term, as economic data due to release from China during the weekend are seen materialising hope for a ‘soft landing’ in the world’s second largest economy. Meanwhile, investors would also keep close eyes on the upcoming two-day FOMC meeting on next Tuesday and Wednesday, as the Federal Reserve Chairman Bernanke will set out 2013 economic projections in the post-meeting policy statement.” BEA Securities. 12-07-12
Chinese Company to Watch: “CHINARES CEMENT (01313, HK) — Mainland government plans to boost economic growth through urbanization, cement and other construction material demands will increase. The Group plans to increase its cement sales by 8% in 2013 which will help to boost earnings growth.” KGI Asia. 12-10-12
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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