China stocks stabilized Monday after significant declines last week, but market sentiment remains depressed.
The Hang Seng Index in Hong Kong ended unchanged at 20,669. The index of Chinese stocks dropped 0.6% to 10,592. Turnover was near rock-bottom levels as investors stayed on the sidelines.
“Since we are declining so steadily this time, a lot of investors would like to see whether we will hold before committing to get back in the market for a rebound,” according to Jackson Wong, vice president of sales at Tanrich Securities.
Window dressing at the end of the quarter provided some support Monday, but it may be difficult to hold even at current low levels.
“There aren’t any positive catalysts out there,” Wong told Equities in an email.
He noted that “dark clouds” loom over the Chinese banking sector. Results so far have been in line with expectations and most big banks look like they will meet their capital requirements.
However, Wong said, some second-tier banks are raising capital, and there are rumors some of the bigger banks will have to raise capital afterall because of problems with local government financing vehicles.
There aren’t many stocks drawing buying interest, Wong said. In the current market uncertainty Investors will probably consider stocks with good earnings.
That will cause them to look closely at this week’s results from Hutchison (HUWHY) and Cheung Kong (CHEUY), he said. End
DAILY FIX
Hong Kong Blue Chips: +0.06, -0.0%, to 20,669, 03-26-12, Hang Seng Index
Chinese Stocks in Hong Kong: -67, -0.6%, to 10,592, 03-26-12, HSCE Index
Shanghai Stocks: +0.05% to 2,351, 03-26-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +3.7, 403.4, 03-23-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong stabilized after last week’s declines due to technical buying at the end of the quarter. But most investors stayed on the sidelines because of concern over Chinese economic weakness and unimpressive corporate results. In-line results from ABC (ACGBY) and share placements from other big Chinese banks pushed the sector down 1-2%. KGI Research
Quotable: “Looking into next week, investors would continue to focus on the earnings reports, in particular of a number of Chinese banks such as Bank of China, ICBC and China Citic Bank. The HSI is likely to trend down in the upcoming week, with support level at 20,500 points.” BEA Security. 3-23-12
Chinese Company to Watch: TPV TECHNOLOGY (TPVTY) computer monitor and flat-screen TV maker. “Net profit declined 29% while prospective P/E is 4.9x, dividend yield of 6.1%, could buy during weakness.” KGI Asia. 3-26-12
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
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