“In general China stocks should be strong early this week because … there’s less risk of credit tightening,” said Peter So, managing director and co-head of research at CCB International.
Improved news about Europe’s debt crisis and the U.S. economy will also boost stocks prices, be told Equities. “Investors will reduce cash holdings and move into stocks with growth potential.”
Among the potential winners are some manufacturers and consumer products plays. Two companies that So likes are computer firm Lenovo (LNVGY) and Brilliance China (BCAHY), which makes BMWs in China.
Gains will probably evaporate later in the week after a steep rise in stock prices since October 4, according to So. End
DAILY FIX -- Chinese Resources Stocks Post Good Gains
Hong Kong Blue Chips: +372, +2.0%, to 18,874, 10-17-11, Hang Seng Index
Chinese Stocks in Hong Kong: +269, +2.8% to 9,853, 10-17-11, HSCE Index
Shanghai Stocks: +0.4%, 2,440, 10-17-11, Shanghai Composite Index.
Chinese Stocks in the U.S.: +5.9, to 375.7, 10-14-11, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong gained as increased optimism that Europe will solve its debt crisis boosted Asian markets. However, turnover fell, reflecting a lack of momentum. Speculation that the European Central Bank would pump money into the economy helped Chinese resources stocks. Coal producers posted strong gains: China Shenhua (CSUAY) rose 5.7%. KGI Research
Quotable: "China is going to release its GDP data on Tuesday, which is expected to grow 9.2% in Q3 after a 9.5% rise in Q2. Meanwhile, major PRC stocks will also reveal their third-quarter results in the next couple of weeks. The results are seen unexciting, as only a few of them have issued positive earnings alerts so far. Investors will also keep close eyes on Europe to see if there is any bailout measures from the EU Summit scheduled on Sunday to help contain market volatility." BEA Securities. 10-14-11
Chinese Company to Watch: Cosco International (0517.HK), shipping service provider "An attractive accumulation opportunity for long-term investors. Cosco Int’l (CSB.BE) fell by 26.4% and underperformed the HSI by 12.0% over past three months. We believe the correction is overdone as the counter is trading below net cash of $5.4bn or $3.6 per share." Guoco Capital. 10-14-11
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