China stocks limped through a second week of losses and weak turnover, battered by worries about Chinese and global economic growth. And although investors in Hong Kong will get two days off for holidays next week, it doesn’t look like market sentiment will improve.
The Hang Seng Index in Hong Kong slid 0.3% Friday to close at 20,556. It edged 0.05% lower for the week after slumping 3.0% last week. The index of Chinese stocks rose 1.0% Friday to 10,646 and finished the week marginally lower.
“Weak corporate results underscored fears that the slowdown in China is hurting profitability,” according to Ben Kwong, chief operating officer at KGI Asia. Arrest of two of Hong Kong’s property tycoons this week on corruption charges added to market unease.
On the broader Asian front markets ended mostly lower this week with resources and energy stocks struggling as commodity prices sagged due to worries about the global economic recovery, he told Equities in an email.
Those worries were aggravated this week by a string of disappointing U.S. economic numbers this week, such as another drop in home prices.
With the Hong Kong exchange closed next Wednesday and Friday for holidays, investors may stay on the sidelines, Kwong said. “Concerns of slow down of China economy growth which might depress corporate earnings, coupled with concern on mainland private owned companies corporate governance issue will continue to hurt the market sentiment in the near term.”
The market will probably consolidate at the current level with resistance at 20,734, the 250-day moving average, he said.
Kwong thinks investors might speculate that slowing Chinese growth will lead to a cut in banks’ required reserve ratio, which would help the banking sector. End
Hong Kong Blue Chips: -54, -0.3%, to 20,556, 03-30-12, Hang Seng Index
Chinese Stocks in Hong Kong: +107, +1.0%, to 10,640, 03-30-12, HSCE Index
Shanghai Stocks: +0.5% to 2,263, 03-30-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: -4.6, 396.9, 03-29-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong blue chips ended the day and week slightly lower as worries about the Chinese economy offset strong results from local heavyweight Cheung Kong Infrastructure (CKISY).
Quotable: “Some market participants are hoping on significant easing of monetary policy from the PBOC (People’s Bank of China) but the magnitude will likely by mild, in our opinion, given the risk of inflation.” BOCOM International. 3-30-12
Chinese Company to Watch: AVICHINA (02357, HK) “It poises to resume an upward trend after the recent consolidation.” Hani Securities. 3-29-12
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