The Hang Seng Index in Hong Kong rebounded 0.7% to 23,307, but turnover was lackluster and the market failed to add to opening gains. The Hang Seng has surrendered 515 points since soaring to a 21-month high on January 30. The index of Chinese companies also bounced back from Tuesday’s losses, rising 1.4% to 11,683.
The market is going through a “healthy pullback” and will trade at 23,000 to 24,000 in the short term, according to Steven Leung, director of institutional sales at UOB Kay Hian.
The “short term” will probably last until China’s National People’s Congress provides details for new economic policies in March, he told Equities. The start of corporate results season in late February will also boost stocks, he said.
Some of the policy details are expected to focus on encouraging the renewable energy sector and shale oil and gas production, Leung said, with Huaneng Renewables (958, HK) possibly emerging as a major beneficiary. Leung’s favorite shale oil and gas play is HongHua Group (196, HK) followed by Anton Oilfield (ATONY). End
Hong Kong Blue Chips: +164, +0.7%, to 23,307, 2-20-13, Hang Seng Index
Chinese Stocks in Hong Kong: +157, +1.4%, to 11,683, 2-20-13, HSCE Index
Shanghai Stocks: +14, +0.6%, to 2,397, 2-20-13, Shanghai Composite Index.
Chinese Stocks in the U.S.: -2.6, 385.8, 2-19-13, Bank of New York Mellon, ADR Index-China
Insight: Rising stocks in the U.S. and Asia helped Hong kong open higher but the market failed to add to gains in sluggish trading. Environmentally friendly stocks starred in the dull market: water treatment company Tianjin Capital (TCEPY) jumped 15.2%. Chinese banks rebounded: ICBC (IDCBY) +1.3%.KGI Research
Quotable: "We remain bullish about the stock market in the medium term and recommend investors to overweight large cap H-shares if the Hang Seng Index dips below 23,000." Guoco Capital. 2-20-13
Chinese Company to Watch: Neo=Neon (1868, HK) "In 2010, LED luminaries penetration rate was only 0.2% in China. China government forecasts the lighting market to grow 30% annually, and plans to achieve an >20% of LED luminaries penetration rate and a 80% of LED chips localization rate by 2015." Tanrich Securities. 2-20-13
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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
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