China Stocks Look to End of February Swoon

Gene Linn  |

With a dreadful February limping to a close, it looks like better days are just ahead for China stocks.

Hong Kong’s Hang Seng Index crept up 0.25% Wednesday to 22,577, but has tumbled 4.85% so far this month after a powerful surge that started last September. The index of Chinese companies sank 0.4% Wednesday to 11,144.

But a number of analysts in Hong Kong are not worried, including Peter So, managing director and co-head of research at CCB International, the brokerage arm of giant Chinese bank CCB.

“I do believe we’re in a mild consolidation after a strong rally,” he told Equities.

The corporate earnings reporting season that just got underway will likely raise hope for beaten-down machinery stocks and industrial goods producers, So said, for investors who know what to look for.

The results themselves will probably reflect poor earnings in 2012, but may reveal a pick-up in demand that will lead to better profits in 2013.

So singled out cement producers CNBM (3323, HK) and Anhui Conch (AHCHY). He also said auto maker Geely (GELYY) will benefit from improved sentiment. End


Hong Kong Blue Chips: +57, +0.25%, to 22,577, 2-27-13, Hang Seng Index

Chinese Stocks in Hong Kong: +40, +0.4%, to 11,144, 2-27-13, HSCE Index

Shanghai Stocks: +20, +0.9%, to 2,313, 2-27-13, Shanghai Composite Index.

Chinese Stocks in the U.S.: +1.3, 377.7, 2-26-13, Bank of New York Mellon, ADR Index-China

Insight: Encouraging signs the U.S. central bank would continue its loose-money policies helped Hong Kong blue chips rise 104 points in the morning, but gains eroded in the afternoon. KGI Research

Quotable: "The first resistance would be 50DMA (23,149), while next resistance would be seen at 20DMA (23,319). For support, the first support would be 100DMA (22,338), while next support would be 22,000." KGI Asia. 2-27-13

Chinese Company to Watch: Nine Dragons Paper (NDGPY) "We maintain the view that the industry is in recovery mode and the effect of negative factors (slowdown in demand, severe new supply growth and sharp rise in financial costs) is fading. We remain positive on both NDP and L&M Paper as their long-term investment themes remain intact." UOB Kay Hian. 2-26-13

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