China stocks on Friday eased into next week’s long holiday with gains from mid-September intact but with no sign of another rally soon.
The Hang Seng Index in Hong Kong edged 0.4% higher to close at 20,840, up 0.05% for the week. The index of Chinese companies inched up 0.6% for the day and 0.03% for the week to end at 9,832.
The market has traded in a narrow range after shooting up 7.8% from September 5 to 14 due to new money-easing policies by central banks in Europe and the U.S. Next week Chinese markets will close for Golden Week, a combination of National Day and Mid-Autumn Festival celebrations. Hong Kong’s stock exchange will shut down Monday and Tuesday.
“The market is in a holiday mood, and not many traders are active,” said Francis Lun, managing director at Lyncean Securities.
“Next week, stocks should rise slightly, but I don’t think the Hang Seng Index will go above 21,000.”
Mainland banks might lead an increase because investors speculate that China may cut their reserve requirement ratios, increasing liquidity, Lun told Equities. End
Next week tune in for a column on China’s upcoming leadership transition and what it might mean for the economy and stocks.
Hong Kong Blue Chips: +78, +0.4%, to 20,840, 09-28-12, Hang Seng Index
Chinese Stocks in Hong Kong: +63, +0.6%, to 9,832, 09-28-12, HSCE Index
Shanghai Stocks: +30, +1.4% to 2,086, 09-28-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: -2.0, 371.8, 09-27-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong rose after the release of Spain’s 2013 budget eased worries about the European debt crisis and U.S. stocks rebounded. With China’s long holiday coming next week, Macau gambling plays and jewelers gained ground. Galaxy Entertainment Group (GXYEY) climbed 4.6%. Sportswear stocks did well: Xtep (XTEPY) rose more than 10%. KGI Research
Quotable: “Market will likely remain volatile and news driven.” BOCOM International. 9-28-12
Chinese Company to Watch: NWS Holdings (NWSGY) “Steady growth. Although the energy and road segments performed below our expectation, strategic investment’s strong performance in facilities management compensated for the miss. We believe a power tariff hike and cost savings from lower coal prices could boost margins of the group’s power plants.” UOB Kay Hian. 9-27-12
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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