China stocks ran out of steam Thursday after pushing the Hong Kong market above a key level, but should find enough support to hold gains.
The Hang Seng Index inched down 0.1% to 20,048 but held on to the hard-won 20,000 level. The index of Chinese companies slid 0.1% to 9,480.
After surging 4.8% from September 5 to 12, the market has discounted some major positive factors, said Ben Kwong, chief operating officer at KGI Asia. They include recent progress dealing with the European debt crisis and possible further support from U.S. and Chinese central banks for sagging economies in those countries.
But he told Equities in an email the Hang Seng should continue “its oscillation around 20,000” with support from window dressing at the end of the quarter and the flow of funds away from the bond market.
The next big theme in trading revolves around the approach of the big Golden Week Holiday in early October in China. Kwong expects buying interest in sectors such as Chinese aviation, consumer electronics and department stores. The flood of Chinese tourists will also boost Macau gambling plays and Hong Kong consumer stocks such as cosmetics. End
Hong Kong Blue Chips: -28, -0.1%, to 20,048, 09-13-12, Hang Seng Index
Chinese Stocks in Hong Kong: -8, -0.1, to 9,480, 09-13-12, HSCE Index
Shanghai Stocks: -16, -0.8% to 2,110, 09-13-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +5.9, 364.4, 09-12-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong stocks weakened ahead of the U.S. Federal Reserve meeting Thursday, U.S. time. Chinese properties gained, with China Overseas (CAOVY) rising 2% to a 52-week high. Launch of Apple’s iphone5 helped stocks in that sector: Smartone (STTFY) rose 5%. KGI Research
Quotable: “All are watching the FOMC statement due to release tonight. Hong Kong stocks rose strongly yesterday after Premier Wen Jiabao signaled China can add enough stimulus to meet growth targets, and as speculation increased that the Federal Reserve will take more steps to boost the US economy.” BOCOM International. 9-13-12
We expect the Hang Seng Index to move between 19,200 and 20,300 in September.” Guoco Capital. 9-11-12
Chinese Company to Watch: “Hutchison (HUWHY) demonstrated their resilience and ability to weather the global economic downtrend, leveraging on its diversified business operations and strong cash position. Despite continued uncertainty in the global economic situation, we believe the company is well positioned for continued growth from potential M&A and internal growth.” Tanrich Secutities. 9-13-12
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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