China stocks investors’ central bank watch continued Tuesday with little market movement and puny turnover in the absence of significant monetary loosening. An unexpected corporate result here and there was about the only thing keeping the market awake.
Hong Kong’s Hang Seng Index was almost unchanged for the second-straight day, edging 0.04% lower to 20,101. The index of Chinese companies rose 0.3% to 9,826.
Turnover has slumped further and further since a 7.5% rally in late July and early August, noted Steven Leung, director of institutional sales at UOB Kay Hian Holding.
“Investors want to see a more (stimulus) from the ECB and loosening in China,” Leung told Equities. “They are watching closely and are not eager to make a move.”
Not only is there not much focus on the market as a whole, investors aren’t chasing sectors of the market either. Instead, Leung said, trading centers on individual stocks that are announcing results. For example, China Mobile (CHL) fell last week after barely meeting profit expectations and food and beverage play Tingyi (TCYMY) rose 5% Monday after reporting good earnings.
One of the biggies set to announce results Friday is Chinese bank CCB (CICHY). Leung expects CCB stock to move little because the market has already factored in lower earnings from interest rate spreads after recent cuts. End
Hong Kong Blue Chips: -4, -0.02%, to 20,100, 08-21-12, Hang Seng Index
Chinese Stocks in Hong Kong: +31, +0.3%, to 9,826, 08-21-12, HSCE Index
Shanghai Stocks: +11, +0.5% to 2,118, 08-21-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: -0.6, 372.5, 08-20-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong blue chips opened and closed almost unchanged in low turnover. However, strong profit reports yielded some individual winners. Sportswear maker X-step (1368, HK) jumped almost 9%, and insurer PICC (PPCCY) gained 7%. KGI Research
Quotable: "We expect the Hang Seng Index to move between 19,800 and 20,300 in near term due to disappointing corporate earnings." Guoco Capital. 8-21-12
Chinese Company to Watch: "(Gold producer) Zhaojin (1818, HK) in has underperformed HSCEI (H shares), Zijin Mining (ZIJMY) and gold futures by 23%, 9% and 28% respectively over last six months. Thus we expect its share price to catch up following management’s clarification on its inventory cleanup." Guoco Capital. 8-21-12
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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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