China Stocks Sentiment Improves -- a Bit

Gene Linn |

Hu Jintao Barack Obama China U.S.The surge in optimism on Tuesday about raising the U.S. debt ceiling did not have a dramatic effect on China stocks in Hong Kong similar to the sharp rally it ignited in U.S. markets.  But Ben Kwong, chief operating officer at KGI Asia, said it will give Hong Kong a moderate boost in coming weeks.

“Sentiment improved a bit because of hopes the president and Congress will reach some agreement on the debt ceiling crisis,” Kwong told Equities. “Also, risk appetite (for stocks) is improving.”

The improvement won’t launch a broad rally, he said: “Stock performance is very mixed. Investors are trading on news.”

The news anticipated in the next couple of weeks focuses on expected strong results from a number of big Chinese companies. The market thinks oil, coal and cement producers will post impressive 2011 first half profit increases, according to Kwong. He likes offshore oil company CNOOC, Yanzhou Coal and construction company Anhui Conch. Shipping and chemicals may not fare so well, he said.



Buying of companies expected to show fast-growing profits should start next week, Kwong said, ahead of release of results. In addition, he said that because the market has been battered by the U.S. debt crisis, any further good news might be “an excuse for a rebound.”  End

DAILY FIX --  Chinese Manufacturing Sags

Hong Kong Blue Chips: -16, -0.07%, to 21,987, 07-21-11, Hang Seng Index

Chinese Stocks in Hong Kong: -60, -0.5% to 12,322, 07-21-11, HSCE Index

Shanghai Stocks: -1.0%, 2,766, 07-21-11, Shanghai Composite Index.

Chinese Stocks in the U.S.: +8.9 to 439.3, 07-20-11, Bank of New York Mellon, ADR Index-China

Insight: An indication that Chinese manufacturing might slow in July pushed stocks in Hong Kong slightly lower after they opened higher due to strong performances by HSBC and China Mobile overnight in the U.S. The HSBC preliminary China manufacturing purchasing managers index fell below 50% in July for the first time since July 2010. KGI Research

Quotable: "New fund inflows are rare, and a lack of investment confidence and bad news from China’s fight against inflation mean the HSI may test the year’s low of 21,500 in the coming months." Haitong Securities. 7-19-2011

Chinese Company to Watch: China Merchants Bank (3968) "If CMB issues the maximum 4.7b additional shares and raises Rmb35b, FY12 EPS may be diluted by as much as 14%." Haitong Securities. 7-19-2011

Brokerages and analysts cited 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
RY.PR.H:CA Royal Bank of Canada Non-Cumulative 5-Year Rate Re 20.44 0.01 0.05 28,812

Comments

Emerging Growth

H-Source Holdings Ltd.

H-Source Holdings Inc. is a technology company operating within the healthcare industry through its subsidiary, H-Source, Inc. The Company has developed a transaction platform that provides a private, secure and…

Private Markets

D-Wave

D-Wave Systems is the first quantum computing company. Its mission is to integrate new discoveries in physics, engineering, manufacturing, and computer science into breakthrough approaches to computation to help solve…

Santo Diablo Mezcal

Santo Diablo Mezcal has been created to capitalize on a boom sector of the beverage market currently full of many small unmemorable products by producing one sexy, household, easily recognizable…