Chinese stocks in Hong Kong followed other global stocks off the cliff Friday. Turnover surged as investors rushed for the exits. Markets can only hope the barrage of bad news ends and just maybe the U.S. Federal Reserve Board will provide a ray of hope.
The focus on alarming news about the U.S. economy and European debt overshadowed good-to-mixed corporate results announcements in Hong Kong.
Big banks HSBC and Standard Chartered released strong earnings statements early in the week. On Friday marker bellwether conglomerate Hutchison Whampoa announced disappointing results, while property giant Cheung Kong’s profits were in line with market expectations.
Nervous investors also ignored an encouraging sign from China’s July PMI manufacturing figure indicating a rebound may be near.
The blue-chip Hang Seng Index crashed below support at 21,500 and 21,000 on Friday to end the week at 20,946, down 6.7%, 1,494 points. The index for Chinese companies plummeted 7.6%, 941 points, to 11,435.
Focus will continue to be overseas, BOCOM International head of research Benny Wong told Equities in an email: “Asian markets always follow the US, therefore if confidence weakens more in the US/Europe, HK market will continue to fall.
“On the other hand, if (the) Fed comes out and hints the launch of QE3 (monetary easing), (the) market has already corrected deep enough and has the potential to stage a strong rebound.”
But for the longer term, Wong is pessimistic for 2012 because he sees a real possibility the U.S. and Europe will go into a recession. End
Hong Kong Blue Chips: -939, -4.3%, to 20,946, 08-54-11, Hang Seng Index
Chinese Stocks in Hong Kong: -459, -3.9% to 11,435, 08-05-11, HSCE Index
Shanghai Stocks: -2.2%, 2,626, 08-05-11, Shanghai Composite Index.
Chinese Stocks in the U.S.: -20.0 to 408.5, 08-04-2011, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong plunged along with other global markets on fears of a sagging U.S. economy and spreading European debt crisis. Turnover almost doubled from recent levels in the rush to get out of the market. Focus now will be on U.S. July employment figures and on bond prices in Spain and Italy. KGI Research
Quotable: "Amidst the tumbling of market, HSI lost all major MAs (moving averages) to form a more bearish market sentiment." Core Pacific Yamaichi. 8-4-2011
Chinese Company to Watch: "CITIC Dameng, the biggest manganese producer in China, issued positive profit alert on Monday." CFSG. 8-4-2011
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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
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