China Stocks Stable Ahead of Economic Conference

Stability was the word of the day Tuesday for China stocks. After bouncing up and down for a few days, the market found equilibrium in good sentiment arising from encouraging economic statistics, worry about weakness of A-shares on Mainland markets and caution ahead of an important economic policy-setting meeting in China.

The Hang Seng Index in China opened 18 points higher, traded in a narrow range, and closed with a gain of 32 points, up 0.15% to 21,800. The index of Chinese companies rose 0.6% to 10,524.

Much of the market’s focus is on China’s Central Economic Work Conference, according to Steven Leung, director of institutional sales are UOB KAY Hian. The conference is expected to start next week, he told Equities.

Investors expect the meeting to emphasize moving farmers into cities – urbanization, Leung said. That policy favors consumption and infrastructure stocks. Leung likes construction company CNBM (3323, HK). He also recommends investors accumulate China Railway Construction (CWYCY) when the price dips below HK$8.00 (US$1.03). End

DAILY FIX

Hong Kong Blue Chips: +32, +0.15%, to 21,800, 12-4-12, Hang Seng Index

Chinese Stocks in Hong Kong: +65, +0.6%, to 10,524, 12-4-12, HSCE Index

Shanghai Stocks: +15, +0.8% to 1,975, 12-4-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: -4.1, 377.5, 12-3-12, Bank of New York Mellon, ADR Index-China – closed by storm

Insight: Hong Kong blue chips opened 18 points higher with a lack of fresh clues and finished with a gain of 32 in narrow trading. China Telecom (CHA) rose 2.9% on news about the launch of iPhone 5. KGI Research

Quotable: “With no capital flow restrictions, cheap valuation and an undervalued HK Dollar, Hong Kong could again be a magnet of global liquidity in 2013, and a better China investment proxy.” BOCOM International. 12-4-12

Chinese Company to Watch: Port operator China Merchants (CMHHY) “The group will further expand its operation in Northern China and Emerging market, both would help to offset the slow growth of HK and Shenzhen ports operation. Overall, it is expected the cargo volume still remain at healthy single digit growth. Attractive valuation: Current price is trading at perspective P/E of 14.0 times, with dividend yield over 3%.” KGI Asia. 12-4-12

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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