Locked in a credit-tightening fight against inflation and slowing exports to struggling foreign economies, Chinese announced Tuesday its GDP fell to 8.9% from 9.1% in the third quarter. But the drop was smaller than expected and – at least temporarily — eased fears of a steep decline.
Hong Kong’s Hang Seng Index surged 3.2% to 19,628, and the index of Chinese companies jumped 4.5% to 10,962. Turnover nearly doubled from Monday’s anemic level. Shanghai’s Composite Index rose 4.2% to 2,298.
Not everyone is so sure China will escape a hard landing. The government itself warned Tuesday of a difficult export environment. BOCOM International, the brokerage for China’s Bank of Communications, has said Chinese economic statistics are not reliable, and a better indication of the direction of the economy is the late-2011 swoon in Chinese stock markets.
For now, China stocks will likeliest go back to thin trading based on developments in the European debt crisis ahead of Chinese New Year’s on January 23. The exchange in Hong Kong will close from January 23 to 25, and the Shanghai and Shenzhen markets will shut down from January 19 to 24. End
Hong Kong Blue Chips: +616, +3.2%, to 19,628, 1-17-12, Hang Seng Index
Chinese Stocks in Hong Kong: +474, +4.5% to 10,962, 1-17-12, HSCE Index
Shanghai Stocks: +4.2%, 2,298, 01-17-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +5.2 to 379.0, 10:44 am ET, 01-17-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong opened higher and kept rising in much higher turnover as investors cheered a lower-than-expected drop in China’s fourth quarter GDP to 8.9%.KGI Asia
Quotable: “More investors are expected to sit on the sidelines ahead of the Lunar New Year holidays, leading to a thinner market turnover. We see the HSI to be range-traded next week with resistance at 19,500. BEA Securities
Chinese Company to Watch: “GUANGDONG INV (GGDVY)— Steady growth of its water supply business to HK. Prospective P/E of 10.5x and dividend yield of 3.8% which is defensive.” KGI Asia. 1-17-12
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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