Chinese Economy Slowing More Than Expected?

Gene Linn |

China Stocks RMBChina stocks ended at four-day losing streak Thursday – barely. But concerns about the slowing Chinese economy still haunt investors.

The Hang Seng Index in the gateway market of Hong Kong rose a slight 0.2% to 20,902. The index of Chinese companies fell 0.1% to 10,767. Turnover, and momentum, slowed sharply.

The HSBC (HBC) preliminary China PMI for March sank to 48.1, indicating weakness in Chinese manufacturing.

“For the last 3-6 months, we worried about the slowdown in China ’s economy may be more severe than expected,” a Hong Kong analyst told Equities in an email. “Latest figures, officials’ comments, and Billiton comments seem to confirm our view.”

Mining giant BHP Bilton has stated that China’s struggling economy would lead to less demand for iron ore.

The analyst said that even with the recent declines, the market does not fully reflect the slowdown in China.

“I think HSI (Hang Seng) will trend down to 19500 – 20,000 in the next few weeks / months.” He said. “ Short-term, I think HK utilities will out-perform. End

DAILY FIX

Hong Kong Blue Chips: +45, +0.2%, to 20,902, 03-22-12, Hang Seng Index

Chinese Stocks in Hong Kong: -9, -0.1%, to 10,767, 03-22-12, HSCE Index

Shanghai Stocks: -0.1% to 2,372, 03-22-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: -7.6, 401.2, 03-21-12, Bank of New York Mellon, ADR Index-China

Insight: Weighed down by concerns about the slowing Chinese economy, Hong Kong struggled at the 250-day moving average resistance level (20,780) before posting slight gains when Mainland stocks rebounded from early losses. Big bank ABC (ACGBY) slipped 1%. Chinese private company stocks fell sharply. KGI Research

Quotable: "Short-selling turnover ratio for blue-chips continued to surge. The surge might be due to the increasing hedging demand over the China’s banking stocks." Core Pacific Yamaichi. 3-22-12

Chinese Company to Watch: "CHINA EB INT’L (257) is engaged in a great variety of environmental energy projects, including waste-to- energy, waste water treatment and alternative energy. In 2011, the Group has secured 59 projects, with a total investment of approx. RMB12bn." Kingston Securities. 3-21-12

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
LEVY Levy Acquisition Corp n/a n/a n/a 0

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