Economic Concerns Blunt China Stocks’ Momentum

China stocks failed to maintain momentum from Friday’s rally as concerns emerged about the Chinese economy.

Another record high on Wall Street Friday pushed Hong Kong’s Hang Seng Index above the 23,000 resistance level, but on Monday the index lost early gains to finish one point lower at 23,091. Turnover was weak. The index of Chinese companies sank 0.4% to 11,436.

Weak growth in imports, which reflected a lackluster economic recovery, and higher-than-expected inflation cut short any chance China stocks had of breaking out of a consolidation that is now lasted almost a month and a half.

The Hang Seng’s support level is the 10-day moving average, 22,783, according to Jackson Wong, vice president of sales at Tanrich Securities. He sees resistance at 23,500.

One sector that looks attractive is Chinese securities, which have benefitted from recent financial reforms, Wong told Equities in an email. CITIC Securites (CIIHY) and Haitong Securities (HAITY) are two prominent brokerages trading overseas. End

DAILY FIX

Hong Kong Blue Chips: -1, -0.0%, to 23,091, 3-11-13, Hang Seng Index

Chinese Stocks in Hong Kong: -49, -0.4%, to 11,436, 3-11-13, HSCE Index

Shanghai Stocks: -8, -0.4%, to 2,311, 3-11-13, Shanghai Composite Index.

Chinese Stocks in the U.S.: +3.8, 381.8, 3-8-13, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong blue chips opened higher following Wall Street’s record close Friday and at one point posted a 150-point gain. But momentum disappeared and the blue chip index finished down one point in thin trading. Clean energy stocks lost some of their recent strong gains: Goldwind (2208) -7.0%. KGI Research

Quotable: “China will release February CPI data on Saturday (9th Mar), which is expected to surge 3.0% on rising food prices during Lunar New Year. Investors will also keep eyes on the US Feb payrolls report due on Friday (8th Mar). The Hang Seng Index may see breakthrough from the recent trading range of 22,500-23,100 should the two economic reports delivered positive surprise.” BEA Securities. 3-8-13

Chinese Company to Watch: “ZOOMLION (ZLIOY) Mainland infrastructure increase which will trigger demand on construction machinery. Prospective P/E of 7x which is attractive.” KGI Asia. 3-11-13

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