China Stocks Stabilize for Now; More Volatility Ahead

Gene Linn  |

After taking a warm-up leap off the Fiscal Cliff late last week, China stocks stabilized Monday but remain vulnerable to abrupt changes in direction brought about by news from China and abroad.

The Hang Seng Index in Hong Kong inched up 0.2% to 21,430 on weak volume, and the index of Chinese companies slipped 0.1% to 10,447.

The Hang Seng plunged 3.2% last Thursday and Friday after the U.S. election when the prospect grew that political gridlock would lead to crippling tax hikes and spending cuts starting January 1 in the United States – the dreaded Fiscal Cliff.

The market seems to have absorbed that worry for the moment, but other concerns loom. One is this week’s decision by European Finance Ministers whether to disburse the next tranche of the Greek bailout, according to Jackson Wong, vice president of sales at Tanrich Securities. In addition, recent Chinese economic data does not give a clear picture yet of whether China’s economy is about to rebound, he told Equities in an email. Trade data suggests the economy is bottoming out, but loan numbers indicate the decline persists.

Defensive plays are safe bets in this news-driven market, Wong said. Chinese infrastructure companies are still favored, he said, and lagging small caps are “the treasure hunt target.” End


Hong Kong Blue Chips: +46, +0.2, to 21,430, 11-12-12, Hang Seng Index

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Chinese Stocks in Hong Kong: -11, -0.1%, to 10,443, 11-12-12, HSCE Index

Shanghai Stocks: +10, +0.5% to 2,079 11-12-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: +0.8, 380.8, 11-09-12, Bank of New York Mellon, ADR Index-China - closed by storm

Insight: Hong Kong stabilized on weak turnover after a sharp decline late last week due to fears of the looming "Fiscal Cliff" in the U.S. Cement producers lost ground: CNBM (CBUMY) -5.0%. KGI Research

Quotable: "As solid supportive economic policies in China are not likely to be announced in the near-term before the formation of its new leadership team, Hong Kong shares may be lack of positive catalysts to drive any significant rebound. Besides, trade data of China will be due on this Saturday, which may impact the stock market direction early next week. The HSI is likely to see support near 20,800 level." BEA Securities. 11-9-12

Chinese Company to Watch: BYD Company (BYDDY) "China Development Bank agreed to provide financing to buyers of BYD's electric buses and taxis so that the buyers do not need down payment if the purchases are for public transportation." BEA Securities. 11-9-12

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

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