China Stocks Join Celebration of Fed Easy-Money Policy

China stocks apparently couldn’t wait until March to start a widely anticipated rally.

After tumbling 4.85% in February through Wednesday, Hong Kong’s Hang Seng Index on Thursday rode the U.S. Federal Reserve’s re-commitment to a loose-money policy to a 2.0% gain. The index finished slightly above the 23,000 resistance level at 23,020 in heavy turnover. The index of Chinese companies soared 2.6% to 11,437.

The powerful rally that carried the market from September last year through January is just beginning to rekindle, according to a number of analysts.

Dickie Wong, executive director-research at Kingston Securities, said most economic data from China, and from the U.S., has been better than expected. And he noted that Fed Chairman Ben Bernanke said Thursday the bank would continue to buy bonds to pump money into the economy.

“I have no fear for the Hong Kong market for the mid-run (three to six months),” Wong told Equities.

He said he doesn’t have any favored sectors but likes some individual companies. One is Brilliance China (BCAUY), which is making good money selling BMWs in China. Another is China Resources Enterprise (CRHKY) whose wide range of holdings – from hypermarkets to drug stores and beer – will allow it to gain from China’s improving economy. And Wong said Prada (PRDSY) is an attractive long-term stock because of its good earnings. End

DAILY FIX

Hong Kong Blue Chips: +443, +2.0%, to 23,020, 2-28-13, Hang Seng Index

Chinese Stocks in Hong Kong: +292, +2.6%, to 11,437, 2-28-13, HSCE Index

Shanghai Stocks: +52, +2.3%, to 2,366, 2-28-13, Shanghai Composite Index.

Chinese Stocks in the U.S.: +2.3, 380.0, 2-27-13, Bank of New York Mellon, ADR Index-China

Insight: The U.S. Federal Reserve Board’s commitment to an ultra-easy monetary policy propelled Hong Stocks to a sharp gain in heavy turnover. AIA (AAGIY) surged 2.5% after analysts upgraded the stock. KGI Research

Quotable: “Elevated sentiment means the market is anticipating lots of good news, and as such, leaves room for disappointment.” BOCOM International. 2-27-13

Chinese Company to Watch: The Chinese government is encouraging the use of energy-saving LED light bulbs “NVC (2222 HK) is a downstream LED player with a well-known energy-saving lighting brand in China, having an extensive distribution network in China (over 3,000 outlets across 2,000+ cities).” Tanrich Securities. 2-28-13

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