Actionable insights straight to your inbox

China Stocks Poised for More Gains

China stocks crept above a key resistance level in Hong Kong Friday as investors’ hopes rose that the re-opening of Mainland markets on Monday would help sustain the current rally.The Hang Seng

China stocks crept above a key resistance level in Hong Kong Friday as investors’ hopes rose that the re-opening of Mainland markets on Monday would help sustain the current rally.

The Hang Seng Index in Hong Kong climbed 0.5% to top the 21,000 level by 12 points. The index of Chinese companies rose 1.2% to 9,965 in continued thin turnover. For the week, the Hang Seng gained 0.8% and the index of Chinese companies closed 1.2% higher.

Stock exchanges In Shanghai and Shenzhen closed this week for the Golden Week holiday and will resume trading Monday. Investors’ optimism is based on the fact that late last week China finally set a date – November 8 — for the Party Congress that will announce new national leaders and set a new direction for the economy. A common view is that current “lame duck” leaders have held back on introducing strong new measures to bolster China’s struggling economy.

“If the Chinese markets open higher, the Hang Seng could see resistance at 21,300, the market high from May,” said Steven Leung, director of institutional sales at UOB Kay Hian.

With China likely to stimulate the economy by investing more in infrastructure, Leung told Equities, cement, steel and oil companies could rise. He particularly likes oil-producer CNOOC (CEO) and Angang Steel (ANGGY). End

DAILY FIX

Hong Kong Blue Chips: +104, +0.5%, to 21,012, 10-5-12, Hang Seng Index

Chinese Stocks in Hong Kong: +117, +1.2%, to 9,965, 10-5-12, HSCE Index

Shanghai Stocks: +30, +1.4% to 2,086, 9-28-12, Shanghai Composite Index. Closed for a holiday.

Chinese Stocks in the U.S.: +2.2, 380.0, 10-4-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong blue chips continued to rise, topping the key 21,000 level in thin trading. Funds continued to rotate to lagging sectors. Automakers rose: Brilliance China (BCAUY) surged 5.9%. With Sino-Japanese ties strained by a territorial dispute, Brilliance gained because it has no links to Japanese carmakers. KGI Research

Quotable: “We recommend short-term investors to take profit if the benchmark index increases to around 21,000.” Guoco Capital. 10-5-12

Chinese Company to Watch: Yuexiu Properties (GUAZY) “The sale of Guangzhou IFC to Yuexiu REIT (405) should help unlock Yuexiu Property’s value and improve its financial position.” Guoco Capital. 10-4-12

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