China Stocks Open Year with Big Gain

Gene Linn |

Bank of ChinaChina stocks opened the year with a big gain Tuesday, and good sentiment might lead to a healthy first week of trading. But the market looks like it’s one bad news story away from a significant drop.

Buoyed by a rise in China’s PMI announced Sunday, Hong Kong’s Hang Seng Index opened 2012 by rising 2.4% to 18,877, and the index of Chinese companies jumped 3.0% to 10,235.

In addition to the good PMI numbers, recent promising economic data from the U.S. should allow the Hang Seng to trade in a higher range of 18,400 to 19,000 this week, according to Jackson Wong, vice president of equity sales at Tanrich Securities.

“Large caps are the best performers with oil and petrochemical companies like PetroChina (PTR), Sinopec (SHI), and CNOOC (CEO) all posting decent gains,” he told Equities in an email.

But Wong said the market basically lacks direction is still news driven. “I don’t recommend people chasing in at this point…,” he said.

For the year, Wong predicts the Hang Seng will reach 20,600 by mid-2012 and could go to 23,800 by the end of the year if additional economic easing measures are implemented by China, the U.S. and Europe. End

DAILY FIX

Hong Kong Blue Chips: +443, +2.4%, to 18,877, 1-3-12, Hang Seng Index

Chinese Stocks in Hong Kong: +299, +3.0% to 10,235, 1-3-12, HSCE Index

Shanghai Stocks: +1.2%, 2,199, 12-30-11 (re-opens Wednesday), Shanghai Composite Index.

Chinese Stocks in the U.S.: +1.2, to 360.7, 12-30-11, Bank of New York Mellon, ADR Index-China

Insight: A higher PMI reading for China and gains on U.S. and European markets boosted Hong Kong to substantial gains on the first trading day of 2012. KGI Asia

Quotable: "For the coming week, turnover is expected to revive after the Christmas and New Year Holidays. Investors will eye on China’s official PMI to be released on 1st January 2012, and anticipate there will be loosening monetary policy such as cut of reserve requirement for banks, which can provide certain stimuli to the market. The HSI is ikely to stay in a narrow range, with its support level at 18,000." BEA Securities. 12-30-11

Chinese Company to Watch: "CHINA TAIPING Insuance (CTIHY) Progressively expand sale agents channels, expecting premium income would recover to 10% growth rate. Recent share price retreated to 2 years low, short term share price may be sustained." KGI Asia. 1-3-12

Brokerages and analysts cited 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
SWC Stillwater Mining Company ($0.01 Par Value) 12.15 -0.11 -0.90 1,596,974

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