It was still consolidation city for Chinese stocks Friday as investors wait for signals from corporate results to get a new direction.
In the gateway market of Hong Kong the Hang Seng Index had tried unsuccessfully in the first two weeks of February to break through the 250-day moving average of about 21,000 . Then on February 15 last week the Index surged to 21,385. But since testing new resistance at 21,800 early Monday this week, the market lost all its momentum.
On Friday the Hang Seng range-traded in low turnover, ending up 0.1% at 21,407, only 22 points above the close February 15. For the week the Index lost 0.4%, 85 points. The index of Chinese stocks slipped 0.2%, 22 points, to 11,690.
The market is suspended between profit-taking pressure after recent gains and strong performance on Mainland exchanges along with encouraging economic news from the U.S., according to Ben Kwong, chief operating officer at KGI Asia.
“Since most HK blue chips will release their earnings starting from next week, we expect investors focus will turn … [to] … the company result,” Kwong told Equities in an email. “Hence, we expect a more obvious direction to be seen during the result release period.”
A big focus next Monday will be results from HSBC (HBC), which accounts for 15% of the Hang Seng, he said. Then in mid and late March the market will be dominated by results from the Mainland financial sector, which has an even higher weighting of 22%. End
Hong Kong Blue Chips: +26, +0.1, to 21,407, 02-24-12, Hang Seng Index
Chinese Stocks in Hong Kong: -24, -0.2, to 11,690, 02-24-12, HSCE Index
Shanghai Stocks: +1.2% to 2,440, 02-24-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: -0.3, 414.2, 02-23-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong opened higher after gains in U.S., but range-traded the rest of the day as low turnover reflected a lack of momentum ahead of announcement of HSBC (HBC) results next Monday.. Shipping plays were strong: China Cosco (CICOY) +3.9%. KGI Research
Quotable: “The market to see more consolidation but liquidity could probably give some support.” BOCOM International. 2-24-12
Chinese Companies to watch: “Global smartphone shipment sustained a strong growth momentum in 2011 and laid solid ground for sectors along the smartphone value chain. We believe AAC Tech (AACAY) is a major beneficiary on its leading market position and favorable exposure to renowned brands, and consider Truly International (TRUHY) as a major beneficiary of the PRC smartphone vendors.” BOCOM International. 2-24-12
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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