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
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
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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.