China Stocks End Week on Downturn

Gene Linn |

China Central Bank People's, China Stocks End Week on DownturnChina stocks followed wide swings in the U.S. market, dropping significantly on Thursday. One analyst thinks Wall Street’s downturn will last, and drag Hong Kong down with it.

Hong Kong’s Hang Seng Index sank 1.0% to 20,593, and the index of Chinese companies lost 1.1% to 10,745. Thursday was Hong Kong’s last trading day of the week, with the market closing for holidays Wednesday and today.

Despite Thursday’s sharp decline, the Hang Seng ended the week marginally higher after good economic news and rising stocks in the U.S. touched off a rally Tuesday. But the downturn may last longer, according to Francis Lun, managing director at Lycean Securities.

U.S. losses are based largely on the Federal Reserves’ intention to postpone further monetary stimulus. In addition, Lun told Equities the U.S. market is ripe for a pullback after rising strongly for three months.

“I think it’s the start of a downward spiral for U.S. stocks, and it will pull Hong Kong down,” he said. “The Hang Seng may fall below 20,000.”

Some of the biggest losers will be banks, Lun said. The growing possibility of a default by Spain drove major U.S. banks lower overnight, and Chinese banks will follow them down.

“The general Hong Kong market is going down, and only selected companies will rise,” Lun said. Personal hygiene and snack maker Hengan International (1044, HK) mayl be one of the gainers, he said. End

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Companies

Symbol Name Price Change % Volume
MDU MDU Resources Group Inc. 29.48 0.14 0.48 1,123,149

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