China Stocks Look to Central Banks for Stimulus

Gene Linn |

China Stocks Rebound from Steep LossesChina stocks continued to trade in a narrow range Thursday after big gains Friday and Tuesday. Investors are standing pat waiting for large central banks to stimulate the global economy, according to one analyst.

The Hang Seng Index in Hong Kong rose 0.5% to 19,809, and the index of Chinese companies edged 0.2% higher to 9,703. Turnover, already modest recently, shrank further.

“Most investors are on the sidelines,” said Francis Lun, managing director at Lycean Securities. “Everyone is waiting for Europe, America or China to launch another round of Quantitative Easing to increase the money supply.”

He noted in an email to Equities that after the last round easing in the U.S., commodity prices and producers surged.

If history repeats itself, Lun said, PetroChina (PTR), coal producer China Shenhua ((CSUAY) and metals company Chalco (ACH) could be among the big winners. End

DAILY FIX

Hong Kong Blue Chips: +99, +0.5%, to 19,809, 07-05-12, Hang Seng Index

Chinese Stocks in Hong Kong: +18, +0.2%, to 9,703, 07-05-12, HSCE Index

Shanghai Stocks: -26, -1.2% to 2,201, 07-05-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: +6.5, 374.3, 07-03-12, Bank of New York Mellon, ADR Index-China

Insight: Stocks in Hong Kong sank in early trading due to weakness in China's A-share market, but rebounded in the afternoon on speculation European banks would cut interest rates. However, gains were capped by the 250-day moving average, 19,856. Power producers fell after China announced it would scrap coal contract sales: Huaneng Power (HNP) -3%. KGI Research

Quotable: "The blue-chip index is expected to move sideway and consolidate near 19,200-19,600, as hope for another cut in reserve requirement ratio in China would help support the stock market. Trading volume is expected to stay subdue ahead of the release of key Chinese economic data scheduled on 9th July." BEA Securities. 6-29-12

Chinese Company to Watch: "(Household goods maker) Techtronic Industries (TTNDY) outperformed HSI by 12% year-to-date. Comment: The strong run in this period is mainly due to bottoming out in US housing market. US market accounted for ~70% of TTI’s annual revenue." Guoco Capital. 7-4-12

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

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
ACH Aluminum Corporation of China Limited American Dep
HNP Huaneng Power Intl
New Gold Inc 10% New Gold Inc.
NGD.NT:CA New Gold Inc.
NGD.NT:APH New Gold Inc.
NGD.NT:PUR New Gold Inc.
NGD.NT:CHI New Gold Inc.
PTR PetroChina Company Limited

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