China Stocks Resume Decline after Closing for Typhoon

Gene Linn |

China Stocks Resume Decline after Closing for TyphoonAlready punished by a stormy opening to this week’s trading with large losses Monday, the China gateway exchange in Hong Kong suffered through a powerful typhoon Tuesday, delaying trading until the afternoon.

When trading resumed so did the losses. The Hang Seng Index sank 0.8% to 18,903 and the index of Chinese companies fell 0.6% to 9,217. And more declines may be on the way.

The cause of Monday’s steep drop, renewed worries over the European debt crisis, is still with us, and now there are new concerns.

“The market is expected to face another round of downward pressure amid the earnings
Season,” BOCOM International said in its daily market report.

The brokerage, an arm of China’s Bank of Communications, noted that China has reported that profits for the large state-owned enterprise sector tumbled 16.4% in the first half of 2012.

BOCOM International stated: “We think the market is too bullish on the earnings of the listed companies and, therefore, selling pressure could (result) if these companies report worse-than-expected results, especially for the cyclicals which are more sensitive to the economy.” End

DAILY FIX

Hong Kong Blue Chips: -150, -0.8%, to 18,903, 07-24-12, Hang Seng Index

Chinese Stocks in Hong Kong: -54, -0.6%, to 9,217, 07-24-12, HSCE Index

Shanghai Stocks: +5, +0.2% to 2,147, 07-24-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: -7.8, 357.8, 07-23-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong extended Monday's losses when it re-opened Tuesday afternoon following a strong typhoon. A substantial rise in the U.S. dollar amid increased worries about European debt is dragging down emerging markets, including China stocks. Hong Kong's blue chip index fell through its first support level of 19,000 with the next support at 18,500. KGI Research

Quotable: "Market short-selling turnover reduced to HK$4.1bn. Its short-selling turnover ratio edged up 0.1ppt to 10.0%. Telecom stocks were under short-selling pressure." Core Pacific Yamaichi. 7-23-12

Chinese Company to Watch: "Our top pick among telecom stocks is (China Unicom, CHU) which should benefit from accelerating 3G net adds and declining handset subsidies ratio in 2H12.... Advice investors to switch from (China Mobile, CHL)" Guoco Capital. 7-23-12

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
MSCA Main Street Capital Corporation 6.125% Senior Note 25.95 0.05 0.21 1,022

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