Hong Kong’s Hang Seng Index rallied slightly above 21,000 last week, which made it “ripe for profit-taking,” according to Francis Lun, managing director at Lycean Securities.
The index sank 1.8% Monday to 20,624 as weakness in Mainland and European markets in the afternoon accelerated early losses. Turnover fell from last week’s low levels. The index of Chinese companies dropped 2.2% to 10,810.
The market will probably end the week below last Friday’s high because there appears to be little news on the horizon, Lun said, aside from results of a meeting of the U.S. Federal Reserve Board.
Hong Kong properties might have a rough week, he said. They face the prospect of soon dealing with new Hong Kong leadership that is worried about high property prices.
Chinese properties on the other hand may gain this week. Bottom-fishing in A-shares of these companies in China will raise the prices of their listings in Hong Kong.
Lun told Equities he likes the big property stocks like China Resources Land (CRBJY) and China Overseas Land (CAOVY). End
Hong Kong Blue Chips: -386, -1.8%, to 20,624, 04-23-12, Hang Seng Index
Chinese Stocks in Hong Kong: -240, -2.2%, to 10,810, 04-23-12, HSCE Index
Shanghai Stocks: -0.7% to 2,390, 04-23-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +1.1, 407.5, 04-20-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong opened lower, and losses accelerated in the afternoon due to weakness in Mainland and European markets. Very slow turnover reflected investor caution. Heavyweight China Mobile (CHL) lost 3.0% after reporting lower-than-expected profits. KGI Research
Quotable: "Market turnover is expected to pick up steam as many PRC companies are going to release their first-quarter results next week. Meanwhile, investors would also keep close eyes on the Federal Reserve’s two-day (Apr 24-25) FOMC meeting to see whether the powerful central bank would shed more lights on the US’ economic outlook and the possibility of QE3. The blue-chip index should see initial resistance near 21,200." BEA Securities. 4-20-12
Chinese Company to Watch: Beijing Enterprise Water Group (BJWTF) “The company revenue drastically declined in the 2011 reference period due to changes of the business structure and involved project cycle, but net profit still maintaining growth. Therefore, the company has no business deterioration. It is very likely that BOT projects will increase in 2012, so we are still optimistic about the company development outlooks." Phillips Securities. 4-23-12
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