A toxic combination of fear of a flare-up in the European debt crisis, short-term speculation and a market closing on Tuesday for a holiday led to a major sell-off Monday for China Stocks in Hong Kong.
The blue-chip Hang Seng Index tumbled 4.2% to 19,031 in light trading as investors did not want to hang onto stocks ahead of the Mid-Autumn Festival on Tuesday. It looks poised to test the recent intra-day low of 18,868 posted on August 9.
The index of Chinese companies plunged below 10,000, finishing down 4.8% at 9,968.
Speculative selling emerged on Friday, according to KGI Asia. Selling gained momentum after U.S. and European markets fell sharply due to concern over the deepening European crisis.
The big loss Monday was a reminder that any boost from good news wilts quickly in the face of bad news about the U.S. economy or European debt. Late last week the market got a small bounce from the unexpectedly large stimulus proposal by President Barack Obama and from a drop in China’s interest rate, but gains quickly reversed.
All blue chips sand Monday, with Chinese cement producers and retailers among the big losers. End
DAILY FIX — Weak U.S., European Markets Hurt Hong Kong
Hong Kong Blue Chips: -836, -4.2%, to 19,031, 09-12-11, Hang Seng Index
Chinese Stocks in Hong Kong: -501, -4.8% to 9,968, 09-12-11, HSCE Index
Shanghai Stocks: -0.5%, 2,498, 09-09-11 (closed for a holiday Monday), Shanghai Composite Index.
Chinese Stocks in the U.S.: -9.2 to 384.9. 09-09-2011, Bank of New York Mellon, ADR Index-China
Insight: Steep losses in the U.S. and Europe battered the Hong Kong market as investors unloaded stocks ahead of Tuesday’s market close for a holiday. Banks, Chinese cement producers and retailers helped lead the market lower. Cement company, China National Building Material (CBUMF.PK) fell 11.3%. KGI Research
Quotable: “Given the declines in U.S. and European stock markets, the Hang Seng Index may test 19,000 in near term.” Guoco Capital. 9-12-2011.
Chinese Company to Watch: China Rareearth (CREQF.PK) “High-end applications of rare earth research and development will get great support of the specialized funds from the Government, which is likely to speed up the consolidation of rare earth industry.” CGSG. 9-9-11
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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