China Stocks Still Looking for Direction

Gene Linn |

China economy Hong KongChina stocks continued their up-and –down meandering on Monday, this time going down. They may have to wait until China and the U.S. announce important economic data on Friday for a firm direction.

The Hang Seng Index in Hong Kong fell 1.4% to 21,265, and the index of Chinese companies slumped 2.3% to 11,471. Turnover declined from Friday’s lackluster level.

The Hang Seng is now below its 21,385 close on February 15 when it soared through strong resistance at 21,000.

Market sentiment weakened Monday after China predicted that GDP growth this year will be 7.5%, down from its previous estimate of 8.0%. The downgrade will tend to push Chinese banks’ stock lower, said Jackson Wong, vice president of sales at Tanrich Securities.

He told Equities in an email that the market is still trading in the 21,000 –to--21,800 range.

“Tons of economic data later this week will give some directions,” he said. “China's CPI and US jobs report on Friday would be the keys.”

In the hunt for winners, investors must think small, Wong said. Companies making baby-related products should do well because a baby boom is expected this year in the auspicious Year of the Dragon.

The so-called “dragon babies stocks’’ mentioned by Wong are Goodbaby International (1086.HK), Prince Frog (1259.HK) and Boshiwa International (1698.HK). End

DAILY FIX

Hong Kong Blue Chips: -297, -1.4%, to 21,265, 03-05-12, Hang Seng Index

Chinese Stocks in Hong Kong: -268, -2.3%, to 11,471, 03-05-12, HSCE Index

Shanghai Stocks: -0.6% to 2,445, 03-05-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: +0.4, 419.3, 03-02-12, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong opened lower due to weakness in Asian stocks and retreated further at mid-morning when Mainland markets showed declines. A report that the parent company of AIA (AAGIY) will raise money though a placement AIA stocks drove the insurance sector lower: China Life (LFC) -4.4%. KGI Research

Quotable: "For the coming week, the blue-chip index is expected to be capped by the key resistance near 21,600-22,800. Investors will keep close eyes on the Mainland’s February consumer price index (due on next Friday), which is seen dropping to below 3.5%, down from 4.5% in January, on stabilizing food prices." BEA Securities. 3-2-12

Chinese Company to watch: "CHINA WATER (DGWIY), China started NPC meeting, policy benefit plays like water and agricultural equipment will be the focus. Its recent buy back of share also helped to lift the sector." KGI Asia. 3-5-12

Huaneng Renewables (HNP), alternative energy "After range trading between$1.80 and $2.0 in past 3 months, share price broke through upper end of the range with huge volume yesterday." Guoco Capital. 3-2-12

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
CRI Carter\'s Inc. 93.37 -1.27 -1.34 659,981

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