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
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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
