China Stocks' Rally Stalls Ahead of Economic Data Release

Gene Linn |

China stocks’ rally sputtered Wednesday ahead of release of key economic statistics. Shares of Chinese oil, steel and other materials are on the knife’s edge, poised to continue the rally or retreat based on GDP, CPI and other numbers.

Hong Kong’s Hang Seng Index was flat Wednesday after surging 6.3% since July 25. The index finished 0.04% lower at 20,066 as turnover slumped. The index of Chinese companies rose 0.2% to 9,868.

The recent upturn in sentiment in the global market can carry China stocks only so far, according to Frances Lun, managing director at Lycean Securities.

“Investors expect GDP for July to stay at 7.6%,” he told Equities. “If it’s not better than that it’s confirmation of the an economic retreat.”

Big losers would be sectors closely linked to the economy, including manufacturing and oil and steel producers, Lun said. On the other hand, these stocks will continue to rise if GDP comes in above 7.6%. End

DAILY FIX

Hong Kong Blue Chips: -7, -0.04%, to 20,066, 08-08-12, Hang Seng Index

Chinese Stocks in Hong Kong: +16, +0.2%, to 9,868, 08-08-12, HSCE Index

Shanghai Stocks: +3, +0.1% to 2,161, 08-08-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: +2.9, 379.6, 08-07-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong blue chips opened up 100 points on a wave of global market optimism but buying interest waned at the higher level. A rise in oil prices helped Chinese oil producers: PetroChina (PTR) +1.1%. Coal companies also gained: Shenhua (CSUAY) +1.8%. KGI Research

Quotable: "Most of the blue-chips advanced due to the improving sentiment." Core Pacific Yamaichi. 8-8-12

Chinese Company to Watch: "China BlueChemical Ltd (CBCUY) is a large modern enterprise engaged in R&D, production and marketing of fertilizers and chemicals as a subsidiary of CNOOC.... The current valuation remains low and is expected to return to a reasonable level, hence 6-month target price to be HKD6.34. In combination with dividend, its overall yield rate is expected to reach 27.1%, hence “buy” rating granted." Philip Securities. 8-7-12

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

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
WBMD WebMD Health Corp 50.40 0.10 0.20 446,427

Comments

Emerging Growth

GSV Capital Corp

GSV Capital Corp is an externally managed, non-diversified closed-end management investment company. The Company has elected to be treated as a business development company.

Private Markets

Uber

Uber connects riders with safe, reliable, convenient transportation providers at a variety of price-points in cities around the world. Uber makes money from charging their drivers 20% of the fare…

XY Find It

Founded by serial entrepreneur Arie Trouw, XY Findables follows a single guiding principle: customers should never lose anything important again. With over 50,000 users around the world, more than 100,000…