China stocks gave investors a modest Christmas present Friday, finishing ahead for the day and week.
Pre-holiday turnover barely showed a pulse in Hong Kong, but the investors who showed up fueled a 1.4% rise in the Hang Seng Index to 18,629. For the week the Hang Seng gained 1.9%, 344 points. The index of Chinese companies rose 1.9% Friday and finished the week up 2.7% to 10,133.
Early in the week China stocks slumped because of disappointment that the Mainland government did not lower banks’ reserve ratio or pump money into big state banks as expected.
But encouraging economic news from the U.S. helped turn sentiment around. And a giant low-interest loan from the European Central Bank to troubled banks in Europe underpinned Hong Kong and other global markets this week, according to Ben Kwong, chief operating officer at KGI Asia.
A rise in the price of oil late in the week boosted energy stocks, he told Equities in and email.
Next week may be even more quiet with the Hong Kong market closed Monday and Tuesday for the Christmas holiday. Energy plays should continue to outperform, Kwong said, and retailers will do well due to anticipated strong Christmas buying.
Kwong added: “Moreover, ahead of the year end, we expect some window dressing related buying on underperforming second and third liners which (are) heavily invested by institutional investors.” End
Hong Kong Blue Chips: +251, +1.4%, to 18,629, 12-23-11, Hang Seng Index
Chinese Stocks in Hong Kong: +188, +1.9% to 10,133, 12-23-11, HSCE Index
Shanghai Stocks: -0.2%, 2,186, 12-23-11, Shanghai Composite Index.
Chinese Stocks in the U.S.: +5.1, to 358.7, 12-22-11, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong blue chips rose above the 200-day moving average on the back of gains in U.S. markets and a strong energy sector fueled by higher oil prices. PetroChina (PTR) rose 2.8%, and Yanzhou Coal (YZC) surged 6.6% after its acquisition of Australian coal company Gloucester Coal Ltd. KGI Asia
Quotable: “We believe market turnover will remain thin while Hang Seng Index is unlikely to surpass 19,000 before the end of the year. We recommend short-term investors to accumulate stocks only when the benchmark index dips below 18,000.” Guoco Capital. 12-23-11
Chinese Company to Watch: “We recommend investors to accumulate Yanzhou Coal (YZC) during the near term headwind.” Guoco Capital. 12-23-11
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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