China 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
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
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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