China Stocks Expected to Move out of Doldrums

Gene Linn |

China Stocks Expected to Move out of DoldrumsChina stocks continued to hibernate Wednesday, barely budging in Hong Kong on very weak turnover. However, China plays may get more energized soon.

In a replay of Tuesday’s quiet market, on Wednesday the Hang Seng Index in Hong Kong changed little. It ended 0.2% lower at 20,646. The index of Chinese companies slipped 0.04% to 10,813.

The next few days are likely to see more movement, according to Ben Kwong, chief operations officer of KGI Asia.

He listed three reasons: the U.S. Federal Reserve Board meeting Wednesday will give hints about additional monetary easing, major U.S. economic data will be released Friday and some big Chinese companies will release first quarter results.

In the longer term, Kwong said, the outlook for Chinese stocks is “not too bad” because China is likely to ease monetary and fiscal policies to support economic growth.

“Hence, if the market declines in next few trading days, it would be a good opportunity for bargain buying,” he told Equities in an email.

Consumption plays would be a good choice, he said, because China is expected to roll out new measures to support that sector soon.

“Besides, given the relatively firm performance of A share market, we expect mainland insurance and brokerage plays will also outperform,” Kwong said. End

DAILY FIX

Hong Kong Blue Chips: -31, -0.2%, to 20,646, 04-25-12, Hang Seng Index

Chinese Stocks in Hong Kong: -4, -0.04%, to 10,813, 04-25-12, HSCE Index

Shanghai Stocks: +0.7% to 2,406, 04-25-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: +0.5, 397.3, 04-24-12, Bank of New York Mellon, ADR Index-China

Insight: Rising Asian markets helped Hong Kong open higher, but stocks lacked momentum at higher levels and posted a small loss at the end of the day. Big Chinese IT companies like China Moble (CHL) were soft. Internet play Tencent (TCEHY) fell due to speculation that Facebook would delay its listing. KGI Research

Quotable: "Our bullish view on stock market remains unchanged despite growing concern about European’s debt crisis again. China is likely to further loosen its monetary policy in near term. We recommend investors to accumulate China stocks if the Hang Seng Index is back to the range of 20,000-20,500." Guoco Capital. 4-25-12

Chinese Company to Watch: Beijing Capital Int’l Airport (694, HK) "Traded at 13.2x 2012 PER, we think the valuation of BCIA is undemanding given strong EPS growth. Guoco Capital. 4=25=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

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AMSGP Amsurg Corp. 5.250% Mandatory Convertible Preferre 124.12 0.00 0.00 57

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