China Stocks Search for Support

Gene Linn |

hong kong china stocksSupport for China stocks is hard to find these days. Hong Kong’s blue chip Hang Seng Index held the 22,800 level Tuesday, which Core Pacific Yamaichi saw as a positive sign, but the index sank to 22,662 Wednesday.

Investors are wary ahead of China’s release of inflation and other economic statistics next week. The statistics will probably present the market with the worst of both worlds: higher inflation and slower economic growth. Yes, slower growth is good if it eventually tames China’s stubborn inflation problem, but it won’t make investors happy in the short term.

CCB International, a subsidiary of China Construction Bank, predicts inflation for May will rise to 5.5% from 5.3% in April and growth in fixed asset investment and industrial production will slow. The brokerage also expects another Chinese interest rate hike in June.

Economic news from the U.S. is not likely to be positive in the short run, especially after Fed Chairman Bernanke acknowledged Tuesday the U.S. was going through a rough patch. As for the European debt crisis, China stocks in Hong Kong have already taken into account a medium-term fix to Greece’s problem with a huge increase early last week.

It seems the last obvious line of defense for now is the attractive valuation of stocks in Hong Kong. P/E numbers are at levels lower than historical norms, and corporate earnings have been brisk. That may help make the eventual rally a strong one. But it may not stop the current bleeding without better news from China or the U.S.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of 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:


Symbol Name Price Change % Volume
FN Fabrinet 33.40 0.40 1.21 979,576 Trade


Emerging Growth

Cavitation Techs Inc

Cavitation Technologies Inc engineers and designs Nano technology based systems that have potential applications in industrial liquid processing.

Private Markets


Voleo is a free download that allows you to form investment clubs with your friends, family, colleagues, classmates, teammates…basically anyone you know and trust. Invest and manage a stock portfolio…

The Green Organic Dutchman

The Green Organic Dutchman Ltd. ("TGOD") produces farm grown, organic cannabis for medical use. The company grows its high quality organic cannabis in small batches using craft growing, all natural…