China stocks took a breather Monday after welcomed good news last week led to a strong rally.
Hong Kong’s Hang Seng Index slipped 0.2% to21,862 in light trading, and the index of Chinese companies fell 0.3% to 10,568.
Both indexes surged 3.6% last week after China announced its first upturn in the manufacturing PMI number in 13 months, and U.S. politicians sounded optimistic about avoiding the fiscal cliff. In addition the U.S. posted some good economic figures, and the Shanghai Composite Index of A-shares rebounded above the key 2,000 resistance level.
This week investors will monitor A-share levels, continuing fiscal cliff negotiations and watch for results of an EU finance ministers meeting on the Greek debt crisis, according to Jackson Wong, vice president of sales at Tanrich Securities.
“I expect Hang Send Index will consolidate at its high level and wait for news,” he told Equities in an email. He said 21,400 will be a short-term support while 22,100, the high of two weeks ago, is the resistance.
Chinese properties, infrastructures, telecoms and oil producers enjoyed huge run ups in last week’s surge. “I expect these sectors should still be favorites but the upside should be limited,” Wong said. “There might be some rotations to cement since this was lagging last week.” End
Hong Kong Blue Chips: -52, -0.2, to 21,862, 11-26-12, Hang Seng Index
Chinese Stocks in Hong Kong: -39, -0.3%, to 10,568, 11-26-12, HSCE Index
Shanghai Stocks: -10, -0.5% to 2,017, 11-26-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: -3.1, 371.5, 11-23-12, Bank of New York Mellon, ADR Index-China – closed by storm
Insight: Hong Kong blue chips opened 73 points higher following a rally on Wall Street Friday, but lost their gains when Mainland A-share markets dropped. Dongfeng Motors (DNFGY) soared 8% on news of a planned joint venture with Renault. KGI Research
Quotable: “While investors awaiting any new stimulus or policy relaxation from China, any earlier-than-expected easing will surprise the market on the upside. Following three-day rally, the HSI may see some correction in the coming week, with resistance at around 22,100 level.” BEA Securities. 11-23-12
Chinese Company to Watch: Oil company CNOOC (CEO) “Combined with the 3% expected dividend yield, the expected rate of return of company will reach 13.1%. Thus “Accumulate” rating maintained.” Phillip Securities. 11-26-12
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