Hutchison Provides Port in Stormy China Stocks Consolidation

Gene Linn |

With China stocks about to head into their third month of a painful consolidation, the focus of investors is narrowing.

That is especially true in the market’s current volatility. Pointing out emerging uncertainties in Europe’s economy and risks of tighter regulation of Chinese banks and properties, KGI Asia Chief Operating Officer Ben Kwong said that “it is still better to put the focus on sector-picking instead of guess(ing) the market trend.”

The on-going corporate earnings season has revealed some companies whose strong results marks them as good prospects, Kwong told Equities in an email. One of them is the big conglomerate Hutchison (HUWHY) with its holdings from Chinese ports and properties to European power stations. It is trading at an attractive 12X prospective FY2013 PE. Kwong also points out that its European operations mainly consist of power and water operations in Britain, which lowers its earnings risk.

Another place to look for winners is among sectors that benefit from favorable Chinese government policies. That includes the solar cell industry. Kwong said, “Although it might still take some time for industry consolidation to return (to) profit, … companies like GCL-POlY’s (GCLPY) share price already retreated sharply from its peak, (and investors) could consider to accumulate.” End

DAILY FIX

Hong Kong Blue Chips: -165, -0.7, to 22,300, 3-28-13, Hang Seng Index

Chinese Stocks in Hong Kong: -137, -1.2%, to 10,896, 3-28-13, HSCE Index

Shanghai Stocks: -65, -2.8%, to 2,236, 3-28-13, Shanghai Composite Index.

Chinese Stocks in the U.S.: +1.7, 372.7, 3-27-13, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong retreated in lackluster turnover, dragged down by a plunge on Mainland markets triggered by tighter banking regulations, poor results for state-owned enterprises and reduced liquidity for the central bank. Chinese banks fared poorly with small-to-mid-sized banks dropping about 4%. Minsheng Bank (CMAKY) tumbled 7.9%. KGI Research

Quotable: "We expect the stock market to rebound in April and maintain our overweight recommendation on Chinese banks and property developers." Guoco Capital. 3-28-13

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

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
CFRXZ ContraFect Corp Wt Cl B Exp 10/31/2015 n/a n/a n/a 0

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