China stocks enjoyed a rebound Tuesday from recent steep losses, but the good times may be fleeting.

Hong Kong’s Hang Seng Index rose 1.8% to 19,453, making up for part of last week’s 3.6% plunge caused by weakening Chinese economic growth. The Index of Chinese companies climbed 1.8% to 9,381.

The gain Tuesday follows two days of flat trading after China revealed early last Friday that GDP growth fell in the second quarter. A big reason for the upturn is an upcoming meeting of Chinese leaders that promises to stimulate the economy, according to Steven Leung, director of institutional sales at UOB Kay Hian Holdings.

But the boost from the meeting will be short-lived, Leung told Equities, because market sentiment is fragile. In addition to falling growth a number of companies are reporting weaker profits, he noted. “The rebound won’t last long,” Leung said. “The market will consolidate between 18,800 and 19,800.”

Investors probably will not jump back in the market in a big way until they see two or three months worth of evidence that China’s economy has bottomed out and is on the way back up, he said. That would most likely mean there won’t be a sustained rally until September or October.

For the short term the leaders’ meeting, which Leung said is likely to happen Wednesday, will probably speed up policies already launched to help certain sectors. Leung favors consumer plays like appliances and infrastructure stocks, including railway company CSR (CSRGY). End

DAILY FIX

Hong Kong Blue Chips: +334, +1.8%, to 19,455, 07-17-12, Hang Seng Index

Chinese Stocks in Hong Kong: +162, +1.8%, to 9,381, 07-17-12, HSCE Index

Shanghai Stocks: +13, +0.6% to 2,161, 07-17-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: -2.1, 359.2, 07-16-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong opened only slightly higher, restrained by a drop on U.S. exchanges, but rallied to end above 10-day and 20-day moving averages. Chinese insurers rose: China Life (LFC) +3.6%. KGI Research

Quotable: “Meanwhile, capital (is) returning to risk aversed assets such as the US$, pushing the US$ index to climb higher. The shrinking liquidity could curb the HK market performance. ” BOCOM International. 7-17-12

Chinese Company to Watch: COSCO Pacific (CSPKY) “We think CP has the advantage of a diverse portfolio of terminals across China and in overseas countries, compared with its listed peers.” BOCOM International. 7-17-12

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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