Hong Kong Focus Shifts to Local Property Market

Gene Linn  |

China stocks continued to bounce along in a narrow range Tuesday responding to breaking news events.

The focus shifted to Wednesday’s upcoming address by Hong Kong chief executive C.Y. Leung that will include policies responding to a rising property prices, according to Steven Leung, director of institutional sales at UOB Kay Hian.

“I don’t think he will introduce much in the way of measures to hold down prices, partly because they haven’t worked in the past,” he told Equities. On the other hand, he thinks the market may be encouraged if the chief executive increases transparency by announcing future supply of government land for sale.

Uncertainty over local properties helped drag stocks down, with the Hang Seng Index edging 0.1% lower to 23,382. The index of Chinese companies closed flat, inching up 0.03% to 12,007.

The next event on deck after the chief executive’s speech will be release of major Chinese economic figures, including GDP, on Friday.

Since a sharp rise on January 3, the market has swung up and down almost daily. Last week it rose on a rebound in China’s exports and sank when Chinese inflation spiked. The Hang Seng climbed Monday on prospects of expanding channels of investment into and out of China for institutional investors.

Leung of UOB Kay Hian said the Qualified Domestic Institutional Investor scheme for Chinese investors probably will not grow significantly in the short or medium term. However he said growth in the Qualified Foreign Institutional Investor plan would bring more business to big Chinese brokerages Citic Securites (CIIHY) and Haitong (HAITY). End


Hong Kong Blue Chips: -32, -0.1%, to 23,382, 1-15-13, Hang Seng Index

Chinese Stocks in Hong Kong: +3, +0.03%, to 12,007, 1-15-13, HSCE Index

Shanghai Stocks: +14, +0.6% to 2,326, 1-15-13, Shanghai Composite Index.

Chinese Stocks in the U.S.: -3.3, 410.2, 1-14-13, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong rebounded after opening 25 points lower but couldn't hold on to gains at the higher level, closing 32 points lower. With Beijing and other cities choking under heavy smog, environmental plays did well: Tianjin Capital (TCEPX) +9%. KGI Research

Quotable: "We see limited upside the Hang Seng Index and expect the index to drop below 23,000 in near term but quality second-liners will outperform the market." Guoco Capital. 1-15-13

Chinese Company to Watch: "China Lumena New Material (thenardite and PPS material producer, 67, HK) - Good Adjustment in Business Structure .... CLMN had finished the repurchase of 250M senior notes that means the financial position of CLMN is in good condition, the ability to expand capacity is strong." Phillip Securities. 1-15-13

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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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