Chinese Stocks Replay Last Week's Wide Swings

Gene Linn |

hong kong china stocksHong Kong appears to love sequels as much as Hollywood. Chinese stocks again started the week with a steep drop and recovered later in the week to end little changed in weak turnover.

Monday’s big drop was fueled largely by overseas factors like the worsening Euro debt crisis and weakening U.S. economic data, Ben Kwong, chief operating officer at KGI Asia, told Equities. But he said at mid-week the market found strong support at the 250-day moving average and rebounded. Chinese commodity plays helped lead the way after commodity prices stabilized.

Better-than-expected results from Gome (0493) and Lenovo (0992) supported Friday’s surge in prices.

For the week the blue chip Hang Seng Index slipped 0.3%, 81 points, to 23,118. The index of Chinese companies edged up 0.1%, 13 points, to 12,948.

Whether there is a replay next week still depends on global market investment flows, according to Kwong. Investors may continue to cut long positions due to uncertainty about the effect of the end of U.S. money-easing measures at the end of June. Movement of the U.S. dollar will be a key signal of the direction of fund flows. A stronger dollar indicates funds are flowing out of Hong Kong.  End

DAILY FIX

Hong Kong Blue Chips: +217, +1.0%, to 23,118, 05-27-11, Heng Seng Index

Chinese Stocks in Hong Kong: +209, +1.6% to 12,961, 05-27-11, HSCE Index

Chinese Stocks in the U.S.: +2.4 to 429.0, 05-26-11, Bank of New York Mellon, ADR Index-China

Insight: Chinese resources plays like PetroChina (0657) led a strong rally. Turnover rose, but remained weak. KGI Research

Quotable: "We expect the index to stay weak in the near term and investors should remain cautious." BOCOM International. 5-26-2011

Chinese Company to Watch: "Tiangong Int’l (0826) has obtained abundant orders for 2011 with a full production schedule till the end of the year. It is expected that the production of HSS cutting tools, die steel and HSS could grow 40% YoY, 30% and 25%, respectively....The recent correction provides very good buying opportunities." BOCOM International. 5-26-2011

Brokerages and analysts cited 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

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Companies

Symbol Name Price Change % Volume
ANW Aegean Marine Petroleum Network Inc. 10.48 0.24 2.34 300,155

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