The Hang Seng Index in Hong Kong closed 0.8% lower at 20,528 after trading in a very narrow range. The index of Chinese companies fell 1.2% to 9,628. Turnover was weak in advance of the week-long Golden Week holiday in China. Hong Kong markets will close Monday and Tuesday.
“There is no (short-term) prospect of a drop in Chinese banks’ RRR or in interest rates, so focus is shifting to Hong Kong properties,” said Peter So, managing director and co-head of research at CCB International. Henderson Land (HLDCY) is one property firm gaining from the strong physical property market in Hong Kong, he told Equities.
With hordes of Mainland tourists about to descend on Hong Kong there are also plays on the Golden week holiday. Jewelers like Luk Fok (590, HK) are gaining, So said. Zhaojin (ZHAOY) and other gold producers are also doing well.
After Golden Week, So doesn’t see much to celebrate. Many investors will stay on the sidelines in October awaiting results from the Chinese Communist Party Congress, which is expected to select a new group of national leaders.
So expects profit-taking during October, particularly in steel producers because poor corporate results are on tap late in the month. Chemical companies will suffer from low prices.
“We might see positive growth in some property developers in Hong Kong and China, gold producers and very selectively in retailers,” So said. End
Hong Kong Blue Chips: -171, -0.8%, to 20,528, 09-26-12, Hang Seng Index
Chinese Stocks in Hong Kong: -117, -1.2, to 9,628, 09-26-12, HSCE Index
Shanghai Stocks: -25, -1.2% to 2,004, 09-26-12, Shanghai Composite Index.
CHinese Stocks in the U.S.: -3.1, 373.7, 09-25-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong opened below the 10-day moving average after a decline on Wall Street and stayed there in weak turnover. Mainland markets also undercut Hong Kong stocks, with the Shanghai Composite Index threatening to break through support at 2,000, but strong performances by Hong Kong properties helped reduce losses. The drop in Shanghai shares sank Chinese insurers: China Life (LFC) -2.2%. KGI Research
Quotable: "We expect that 20,300 will be a major support, while 21,000 will be a major resistance." Core Pacific Yamaichi. 9-26-12
Chinese Company to Watch: Publisher Xinhua Winshare (SHXWY) "It is a defensive stock with high dividend yield. In addition, company’s net cash plus book value of its equity investments amounted to $3.40 per share, providing plentiful support." Guoco Capital. 9-26-12
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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
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