So much for the New Year rally for China stocks. Investors now look to consumer plays for gains.
The gateway market of Hong Kong posted a nice rise in the first trading day of 2012 on Tuesday, but paltry turnover hinted there was no momentum. Sure enough, the market rose at the open Wednesday then turned lower when Mainland Chinese exchanges re-opened with a decline.
The blue-chip Hang Seng Index ended 0.8% lower at 18,727, and the index of Chinese companies fell 1.4% to 10,094. Turnover increased but was still weak.
Hopes for gains in the near term focus on Chinese consumption stocks. China’s Ministry of Commerce said it will soon announce details for new stimulus policies to boost domestic consumption to offset weak export demand, according to Ben Kwong, chief operating officer at KGI Asia.
“After some of the subsidy programs expired, mainland official(s) emphasized that boosting domestic consumption is of paramount importance in 2012,” Kwong told Equities in an email.
“Therefore, we expect that mainland consumption plays such as home appliances and auto plays will perform better in near term.” End
Hong Kong Blue Chips: -150, -0.8%, to 18,727, 1-4-12, Hang Seng Index
Chinese Stocks in Hong Kong: -141, -1.4% to 10,094, 1-4-12, HSCE Index
Shanghai Stocks: -1.4%, 2,169, 01-04-12 (re-opened Wednesday), Shanghai Composite Index.
Chinese Stocks in the U.S.: +14.1, to 374.8, 01=03-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong opened higher following gains in global markets, but turned lower after Mainland exchanges re-opened with a significant drop. Turnover increased but was still weak. KGI Asia
Quotable: “It will be interesting to see how strong is the market momentum today after yesterday’s gains.” BOCOM International. 01-04-12
Chinese Company to Watch: “Sources said China will introduce the new nuclear power safety regulations, implying that China may resume the approval of nuclear power projects soon. SH Electric (SIELY) is likely to benefit.” BOCOM International. 01-04-12
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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