The Hang Seng Index in Hong Kong climbed to a year-high 22,162 in early trading before taking a dive when A-shares in Shanghai tumbled to another low for year. The Hang Seng ended 1.2% lower at 21,768, and the index of Chinese companies fell 1.5% to 10,459. The Hang Seng hit the year-high close of 22,111 on November 2, but retreated from that level this Monday and last Monday.
Breaking through 22,111 is an “uphill battle,” according to Jackson Wong, vice president for sales at Tanrich Securities, because of the weak A-share market and concerns over “fiscal cliff” negotiations in the U.S. Profit-taking at the high level is another drag on the market.
But there is ample ammunition for another try. China’s November PMI number, released on Saturday, reflected a rebound in manufacturing, strengthening the feeling China’s economy bottomed out in the third quarter and growth is rising again. Wong also told Equities in an email that a strong Hong Kong dollar shows foreign funds are still flowing into the market and “general sentiment is still pretty positive.”
The main themes for investors this week are clean energy plans and urbanization/infrastructure, Wong said. The energy angle will help natural gas exploration and service-related stocks, while cement and construction companies will ride the infrastructure wave. End
Hong Kong Blue Chips: -263, -1.2%, to 21,768, 12-3-12, Hang Seng Index
Chinese Stocks in Hong Kong: -164, -1.5%, to 10,459, 12-3-12, HSCE Index
Shanghai Stocks: -20, -1.0% to 1,960, 12-3-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +1.3, 381.6, 11-30-12, Bank of New York Mellon, ADR Index-China – closed by storm
Insight: Hong Kong and other Asian markets opened higher due to weakness in the U.S. dollar, but Hong Kong took a steep dive when A-shares in Mainland China plunged. The drop in A-shares hurt Chinese brokerages and insurers: CITIC Securities (CIIHF) -2.5%. KGI Research
Quotable: “Looking ahead, market focus will turn to the official China PMI index and the US employment data, which will be released on coming Saturday and next Friday respectively. Trading is expected to remain cautious as weak A shares in China and the Christmas holidays may keep investors sidelined. The Hang Seng Index is expected to be capped at its nearest resistant level of 22,150 in the coming week.” BEA Securities. 11-30-12
Chinese Company to Watch: “Lee & Man Paper(LMPMY’s 1H12 net profit increased 4.3% to HK$674mn, the better inventory turnover of raw materials, finished products and the account receivables turnover showed the overall operation conditions and sales were improving.” Tanrich Securities. 12-3-12
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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