China Stocks Spurred by Overseas Money

Gene Linn |

China Currency RMBChina stocks rose for the fourth-straight day Tuesday, and one analyst says an influx of money from overseas will keep the rally going.

Hong Kong’s Hang Seng Index, which includes heavyweight Chinese companies, rose 1.0% to 21,340, and the index of Chinese companies climbed 1.1% to 11,356. Turnover was thin.

The four-day upturn comes despite recent discouraging economic news from China. The Hang Seng plunged 4.3% from Monday through Wednesday last week after the Chinese premier announced the country’s 2012 GDP target would be cut by half a percentage point. Then over the weekend China announced a larger-than-expected decline in the key export sector.

Still, investors came in after the steep decline, and the index has regained most of the ground lost early last week.

The impetus behind the rise is an influx of money from overseas, according to Peter So, managing director and co-head of research at CCB International. The company is the brokerage arm of giant Chinese bank CCB. The inflow showed up in a stronger Hong Kong dollar as well as in an increase on the stock market, he said.

“I think we will reach higher levels by the end of the week and test 21,500 to 21.700,” So told Equities.

Among the stocks benefitting, he said, will be Chinese financials like major bank ICBC (FXI) and insurance companies like Ping An (PNGAY). Laggards such as China Mobile (CHL) will also advance. End

DAILY FIX

Hong Kong Blue Chips: +206, +1.0%, to 21,340, 03-13-12, Hang Seng Index

Chinese Stocks in Hong Kong: +130, +1.1%, to 11,356, 03-13-12, HSCE Index

Shanghai Stocks: +0.9% to 2,456, 03-13-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: -0.1, 413.2, 03-12-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong blue chips opened 145 points higher and added further gains as overseas money chased heavyweight stocks, including some that will announce results in the next three weeks. KGI Research

Quotable: "Coal shares gained as the market looks forward to the launch of the industry’s twelfth five-year plan this month." Kingston Securities. 3-12-12

Chinese Company to watch: "CHINA RES CEMENT (CARCY) had 80% of its revenues coming from Guangdong and Guangxi and has strategically entered new regional markets such as Inner Mongolia and Yunnan through acquisitions.Kingston Securities. 3-12-12

Brokerages and analysts cited here 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
RAD Rite Aid Corporation 8.12 0.06 0.74 6,285,598
CHL China Mobile Limited 54.21 -0.06 -0.11 664,630

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