China stocks failed Thursday to reach a year-best close in Hong Kong for the first time this week, but there is plenty of fuel for more gains this year.
The Hang Seng Index slipped 0.3% to 22,446, apparently temporarily running low on gas after jumping 3.2% from December 4 to 12, hitting four year-high closes on the way. The recently red-hot index of Chinese companies edged 0.2% lower Thursday to 11,143.
But ample global market liquidity stands ready to spur further stock price increases, said Ben Kwong, chief operating officer at KGI Asia. The U.S. Federal Reserve Board added to that liquidity as expected Wednesday, loosening monetary policy a bit more. Investors’ end-of-year window dressing will also tend to push stocks higher, Kwong told Equities.
He added, “Hong Kong has its own story: Anticipation of improvement in the Chinese economy is attracting a continued flow of funds.”
The Hang Seng will probably rise to 22,500 to 23,000 in the rest of 2012, according to Kwong, slowing somewhat to digest recent gains.
In this liquidity driven market investors are chasing lagging stocks, without much regard for fundamentals. “It all depends on the share price,” Kwong said. “Every day I look at the trends to see which stocks are near the bottom of their price range.”
Favorites come and go quickly as share prices fluctuate. At the present, shale oil plays are doing well, including Anton Oil (3337, HK) and Honghua (196, HK). End
Hong Kong Blue Chips: -58, -0.3%, to 22,446, 12-13-12, Hang Seng Index
Chinese Stocks in Hong Kong: -19, -0.2%, to 11,143, 12-13-12, HSCE Index
Shanghai Stocks: -21, -1.0% to 2,061, 12-13-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +1.3, 388.3, 12-12-12, Bank of New York Mellon, ADR Index-China – closed by storm
Insight: Hong Kong opened flat and drifted lower in slightly more active trading. Chinese properties retreated: China Overseas Land (CAOVY) -2%. But shale oil plays continued to gain: Anton Oil (3337, HK) +2%. KGI Research
Quotable: “Optimism and liquidity may continue to support the market.” BOCOM International. 12-13-12
Chinese Company to Watch: Maanshan Iron (MAANY) “Steel players have been the laggers in the HSI, and it’s now their turn to pick up, after the shining of the construction players in the last quarter.” Tanrich Securities. 12-13-12
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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