This week seemed to promise more of the same for China stocks in Hong Kong: a few ups and downs in dull trading, with little change at the end of the week. The week has even started with the same scary, steep decline on Monday.
Today’s drop was even more frightening. Hong Kong’s index of Chinese stocks plunged 2.5%, and blue chips fell even further below 23,000 than they did last Monday.
Stocks fought back last week with Chinese blue chips regaining the 23,000 level and the Chinese companies finishing with a small gain.
Once again with no significant Chinese economic announcements or major company results on the horizon, any rebound will likely be sparked by events overseas. Last week it was a rally on Wall Street.
One big feature in Hong Kong this week is the beginning of trading for three companies that had successful IPOs last week. Chinese luxury handbag retailer Milan Station (1150), which was oversubscribed 2,100 times, rose sharply today. International commodities giant Glencore (0805) launches trading May 25, and China’s largest wood flooring brand, China Flooring (2083), starts May 26. End
Hong Kong Blue Chips: -486, -2.1%, to 22,711, 05-23-11, Heng Seng Index
Chinese Stocks in Hong Kong: -324, -2.5% to 12,624, 05-23-11, HSCE Index
Chinese Stocks in the U.S.: -3.1 to 431.3, 05-20-11, Bank of New York Mellon, ADR Index-China
Insight: Worry about the European debt crisis and tightening liquidity in China drove Hong Kong and Shanghai stocks sharpy lower. KGI Research
Quotable: "For the coming week, the HSI is expected to keep moving sideway near 23,000 – 23,500." BEA Securities. 5-21-2011
Chinese Companies to Watch: "Sino Biopharm (1177.HK) – 1Q11 revenue and net profit attributable to shareholders of the Company increased 36.3% and 14.6%, respectively, representing an EPS of HK$0.02. The rapid growth in revenue was mainly due to low base effect. Contraction in GM and higher expense ratio led to a slower profit growth. 2011-2013 EPS are estimated to be HK$0.13, HK$0.16 and HK$0.20, respectively. Maintain TP at HK$3.25. As 1Q is usually the low season, we keep the rating at “Buy”." BOCOM International. 5-23-2011
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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
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