China stocks limped into the Chinese New Holiday season Friday after a long, powerful rally. They may come out of the holiday break next Thursday at the same modest pace, according to one analyst.
The Hang Seng Index in Hong Kong edged 0.2% higher in slow turnover to 23,215, down 2.1% for the week. The index of Chinese companies slumped 0.3%, off 4.6% from last week.
The Hang Seng reversed early losses Friday as encouraging Chinese import, export and inflation statistics indicated the rebound in GDP growth that started in the fourth quarter of 2012 is continuing.
But the market is showing signs of fatigue after surging 24.4% from September 5 last year to a 21-month high of 23,822 on January 31, dropping 2.5% in waning turnover since hitting the high mark.
Ben Kwong, chief operating officer at KGI Asia sees more of the same when the Hong Kong market resumes trading next Thursday. “We think HK stock market might still consolidate after the CNY (Chinese New Year) holiday the given market has accumulated substantial gain since 4Q12,” he told equities in an email.
However, he said the continued inflow of foreign funds into the market would likely limit losses, with major support at 22,931, the 50-day moving average. End
Hong Kong Blue Chips: +38, +0.2%, to 23,215, 2-8-13, Hang Seng Index
Chinese Stocks in Hong Kong: -32, -0.3%, to 11,650, 2-8-13, HSCE Index
Shanghai Stocks: +14, +0.6%, to 2,432, 2-8-13, Shanghai Composite Index.
Chinese Stocks in the U.S.: -5.2, 386.4, 2-7-13, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong blue chips opened 66 points lower but rebounded to post a small gain after the release of encouraging Chinese import, export and inflation numbers. Turnover slumped ahead of the close of the market February 11 to 13 for Chinese New Year. Research
Quotable: “We recommend long term investors to accumulate stocks if the Hang Seng Index dips below 23,000 in near term.” Guoco Capital. 2-8-13
Chinese Company to Watch: “Right time to BUY leading Chinese property developers after deep share price correction…. Top picks will be leading players with excellent earnings record and strong execution capability such as China Overseas Land (688, HK), China Resources Land (CRBJY) and Longfor Properties (LGFRY.” Guoco Capital. 2-8-13
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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