China stocks on Monday shrugged off the release of the first set of economic statistics due this week. The news ostensibly was good, but had little effect on the Hong Kong market.
The growth in China exports in September was 9.9%, easily exceeding market expectations, according to KGI Asia. And imports, which fell in August, rose 2.4% in September on the back of improved domestic demand. Inflation edged down to 1.9% in September from 2.0% in August. That may give the government a bit more room to stimulate the Chinese economy.
Investors in Hong Kong, however, basically said, “Ho hum,” to the new statistics. The Hang Seng Index traded in a narrow range, ending 0.06% higher at 21,148 in reduced turnover. The index of Chinese Companies rose 0.3% to 10,375.
Probably the biggest numbers are coming Thursday with the release of third quarter economic statistics, which will give the best indication of how much the Chinese economy is slowing.
“How investors interpret the data this week will drive the market’s ups and downs,” said Jackson Wong, vice president for sales at Tanrich Securities. “The general consensus is that if they are not out of whack, then investors are still relatively confident that China is managing the slow down well and will start roll out (of) fiscal policies soon or right around the 18th Party Congress (November 8).” End
Hong Kong Blue Chips: +12, +0.06%, to 21,148, 10-15-12, Hang Seng Index
Chinese Stocks in Hong Kong: +30, +0.3%, to 10,375, 10-15-12, HSCE Index
Shanghai Stocks: -6, -0.3% to 2,099, 10-15-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +0.3, 381.5, 10-12-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong traded in a narrow range, ending marginally higher in lower turnover. Shippers gained due to a stronger-than-expected rise in Chinese exports in September. ZTE ZTCOY) plunged 16% after issueing a profit warning. KGI Research
Quotable: “Hong Kong market may become volatile next week amid the releases of China September economic data. Trade data are slated to come out on Saturday, with inflation numbers due on Monday. Third-quarter growth igures, due next Thursday, are the market focus as they will be used to assess the state of the slowing Chinese economy. Nonetheless, major policy changes are unlikely seen until after the 18th National Congress meeting that takes place on 8th November 2012.” BEA Secutities. 10-12-12.
Chinese Company to Watch: China Communications Construction (CCCGY) “The MOR (Ministry of Railways) announced that the fixed asset investment was RMB72.6bn in September, jumped 93%yoy or 53%mom.The counter… (China Communications Construction) is trading at perspective P/E of 7 times; valuation is attractive given its relatively low debt level and higher margin.” KGI Asia. 10-15-12
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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