A big fat Chinese New Years’ present may be needed to restart the China stocks rally as the gateway market in Hong Kong continued to mark time Wednesday.
The Hang Seng Index opened higher but couldn’t hold onto gains, ending down 0.1% to 23,635, and the index of Chinese stocks sank 0.2% to 12,167.
After a major rally capped by a 2.9% surge the first trading day of 2013, the Hang Seng has crept higher in narrow, range trading. The Chinese government has announced new policies to stimulate the economy, but they haven’t jolted the market back to life.
“Urbanization of villages, policies to help clean energy – they haven’t been enough,” said Francis Lun, managing director at Lyncean Securities. “The market wants more.”
Investors demand monetary stimulus from the government, he told Equities, and they will get it if rumors of impending increased bank lending are true. Lun expects expanded lending or a similar level of monetary push will be introduced soon, before the Chinese New Year holiday starts on February 10.
With more cash in the economy, he said, banks and insurers will lead the market higher. End
Hong Kong Blue Chips: -24, -0.1%, to 23,635, 1-23-13, Hang Seng Index
Chinese Stocks in Hong Kong: -30, -0.2%, to 12,167, 1-23-13, HSCE Index
Shanghai Stocks: +6, +0.2% to 2,321 1-23-13, Shanghai Composite Index.
Chinese Stocks in the U.S.: -1.3, 407.1, 1-22-13, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong posted gains at the opening, but profit-taking at the higher level pushed the market lower. Chinese properties fell. Yuzhou Properties (1628, HK) plunged 16.5% after a shareholder sold the stock at a discount. KGI Research
Quotable: “We expect the Hang Seng Index to test 24,000 in near term led by Chinese banks and insurers.” Guoco Capital. 1-23-13
Chinese Company to Watch: Chongqing Rural Commercial Bank (CRCBY) “Due to the stable profit performance of CRCB, and the achievement of previous TP, we increase the 12-M TP to HK$6.00, 21% higher than the latest closing price approximately, equivalent to P/E7x and P/B1.3x in 2013 respectively. Maintain Buy rating.” Phiilp Securities. 1-23-13
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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