China Stocks Face 'Bumpy Road'

Gene Linn  |

It could be a rough week ahead for China stocks after discouraging news emerged from the US and China. The Hong Kong market remained closed Monday for the Easter holiday after the Hang Seng Index ended at 20,593 last Thursday. Shanghai's Composite Index sank 0.9% Monday to 2,286.

Hong Kong faces a “bumpy road ahead” after US jobs data disappointed Friday and Chinese inflation figures came in higher than expected on Monday, according to Jackson Wong, vice president of sales at Tanrich Securities.

The Chinese CPI of 3.6% “is a bad sign that officials might be reluctant to roll out more pro-growth policies,” Wong told Equities in an email.

Add a worsening debt crisis in Spain, he said, and the Hang Seng Index will probably consolidate between 20,200 and 21,000 this week.

Chinese private companies will still suffer from accounting scandals, but more solid companies like Macau gambling plays and Chinese properties should hold up relatively well, Wong said..

Chinese banks and other finance sectors, which carry a big weight in the Hang Seng, have been hit by negative news but have limited downside because they offer significant value at their current level, according to Wong.

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