China Stocks Stall; Sentiment Still 'Quite Strong'

Gene Linn |

China stocks ended little changed Tuesday but investors are poised to jump in and restart the late-2012 rally, according to one analyst.

“Sentiment is still quite strong despite the mild pullback,” said Steven Leung, director of institutional sales at UOB Kay Hian. “The upward trend has not been affected.”

Investors are on the sidelines waiting to buy cyclical stocks connected to the China economic recovery theme on dips in the market, he told Equities. They may find opportunities when share placements drag the market down.

Potential buyers didn’t get much of a dip Tuesday: Hong Kong’s Hang Seng Index inched 0.08% lower to 22,495 after a small drop Monday. The index hit four year-high best closes last week and has climbed 17.5% since September 5. The index of Chinese companies edged up 0.07% Tuesday to 11,302. Turnover nearly doubled, but about half of it came from AIG’s divestiture of its entire stake in AIA (AAGIY).

With investors waiting for brief downturns before jumping into the market and only two weeks left to the end of the year, Leung said the Hang Seng’s gains will probably be capped at 23,000. “Institutions are not chasing stocks aggressively,” he said.

Buying will focus on cyclical financial and infrastructure stocks. End

DAILY FIX

Hong Kong Blue Chips: -19, -0.08%, to 22,495, 12-18-12, Hang Seng Index

Chinese Stocks in Hong Kong: +8, +0.07%, to 11,302, 12-18-12, HSCE Index

Shanghai Stocks: +2, +0.1% to 2,162, 12-18-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: -0.3, 389.8, 12-17-12, Bank of New York Mellon, ADR Index-China - closed by storm

Insight: Hong Kong opened slightly higher and traded in a narrow range. Turnover shot up with about half of it coming from AIG's divestiture of its stake in AIA (AAGIY). AiA slumped 3.3%. Share placements brought some stocks down: Comtech Solar (0712, HK) -3.2%. KGI Research

Quotable: "Without any fresh news, market will likely consolidate." BOCOM International. 12-18-12

Chinese Company to Watch: "Chu Kong Pipe (1938, HK) A leading high-end welded pipe manufacturer well positioned for surging oil and gas pipeline construction activities." BOCOM International. 12-18-12

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
BGS B&G Foods Inc. 48.82 0.00 0.00 0

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