The blue-chip Hang Seng Index in China gateway Hong Kong rose a slight 0.15% Tuesday to 20,918 in meager turnover. The index of Chinese companies fell 0.5% to 11,413.
The Hang Seng has soared 13.4% this year but twice fell back from the 21,000 level last week. That is the current 250-day moving average and apparently the bull/bear market line and provides formidable resistance, according to Jackson Wong, vice president for sales at Tanrich Securities.
He told Equities in an email that if the market breaks through 21,000, the next resistance will be at 21,800. For support, buying is strong at 20,600. “(I)f the market drops below that level, I will suggest investors to wait for the 20,000-20,200 (level) to get in,” Wong said.
Major market movers this week will be U.S. CPI numbers and Greek debt talks he said.
With the market consolidating, the hunt is on for laggards.
“A lot of second or third tier stocks have a huge run up already, so investors are still digging for anything that is below 250 day moving average line, although there aren’t that many out there, it’s like treasure hunt,” Wong said.
With few alternatives, investors may start buying big caps like Chinese banks and resources companies, he said, which might help the Hang Seng break through the 250-day line, he said. End
Hong Kong Blue Chips: +30, +0.15%, to 21,918, 02-14-12, Hang Seng Index
Chinese Stocks in Hong Kong: -54, -0.5%, to 11,413, 02-14-12, HSCE Index
Shanghai Stocks: -0.3% to 2,345, 02-14-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +6.0, 412.0, 02-13-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong opened 45 points lower and traded in a narrow range in light turnover. Bank of East Asia (BKEAY), which kicked off the current corporate reporting season, fell 2.8% after profits came in at the low end of market expectations. Kingsway Brewery (0124, HK) jumped 10.1% on rumors that Anheuser Busch InBev, China Resources (CRHKY) and Tsingtao Brewery (TSGTY) might make a bid. KGI Research
Quotable: “We reiterate our view that short-term investors should take profit on cyclical stocks and wait for another buying opportunity. The best entry point for the Hang Seng Index is 20,000 or below.” Guoco Capital. 2-14-12
Chinese Companies to watch: “Chase laggard with earnings recovery ahead – BUY Dalian Port (PDA)…. We recommend a BUY on Dalian Port with 3-month target price of $2.48, equivalent to 10.4x 2012 PER.” Guoco Capital. 2-14-12
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