China stocks ended 2012 quietly Monday with a tiny decline in thin, half-day trading before the New Years holiday in Hong Kong. But investors aren’t complaining after a 22.9% rise in the Hang Seng Index for the year. The fact that most of the gains came in the last four months of the year and the index hit year-high closes consistently in December reflects healthy momentum heading into 2013.
The Hang Seng, which features numerous large Chinese counters, slipped 0.04% Monday to 22,657, and the index of Chinese companies gained 0.5% to 11,436.
Despite the holiday closing Tuesday, the week looks eventful with U.S. fiscal cliff drama and the release of Chinese PMI manufacturing figures and U.S, employment numbers, said Jackson Wong, vice president of sales at Tanrich Securities
He told Equities in an email that 2012 gains should extend into the new year. He sees a first-half 2013 target of 24,200 and a full-year figure of 26,000. The main reasons: monetary easing in major economies will continue to flood Hong Kong with hot money, and a rebounding Chinese economy and resurgent Mainland stocks will provide fundamental support.
The new Chinese leadership’s emphasis on urbanization and agricultural efficiency will boost infrastructure, cement producers and properties early in the year with appliances and other retail sectors following along, Wong said. End
Hong Kong Blue Chips: -10, -0.04, to 22,657, 12-31-12, Hang Seng Index
Chinese Stocks in Hong Kong: +58, +0.5, to 11,436, 12-31-12, HSCE Index
Shanghai Stocks: +36, +1.6% to 2,269, 12-31-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: -0.4, 395.3, 12-27-12, Bank of New York Mellon, ADR Index-China – closed by storm
Insight: Hong Kong opened lower on news U.S. fiscal cliff talks were stalling, but losses narrowed after a rally in Mainland A-shares. Oil equipment stocks fared well: Honghua (0196, HK) +18.5%. KGI Research
Quotable: “Looking ahead, turnover is expected to remain thin next week as the trading week is shortened by New Year’s Day holiday. US unemployment data due next Friday will draw considerable attention. Since Hong Kong equity market continues to be driven by liquidity and the rally of A-share markets, the Hang Seng Index may test 23,000 level next week.” BEA Securities. 12-28-12
Chinese Company to Watch: “Changsha Zoomlion (heavy machinery, capital equipment maker ZLIOY) As an important subject of the 18th National Congress of China, the modernization of agricultural environment is expected to speed up in …coming years, stimulating the demand of agricultural devices…. Zoomlion is expected to become the largest device maker by revenue of 3Q2012. Zoomlion is looking to benefit from the urbanization trend with its lower
leverage and stable performance.” Tanrich Securities. 12-31-12
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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