China 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
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
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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