Chinese New Year on January 23 is a day of lavish spending on celebrations and gifts. Investors in Chinese stocks should feel a bit more comfortable with the extravagances after tidy gains, but they may suffer a spending hangover after trading resumes.
Hong Kong’s benchmark Hang Seng Index rose 167 points, 0.8 percent, Friday to 20,110, a rise of 9.1 percent in 2012. The index of Chinese companies edged 8 points higher, 0.08 percent, to 11,147 Friday, up 12.4 percent for the year to date.
However, even in the auspicious new Year of the Dragon, those gains look shaky.
“We anticipate a tough 1Q12 for China economic growth slowing to 7.5 percent on the back to weakness in 4O11,” CCB International said in an economic analysis on its website.
Guoco Capital said in its Market Watch the Hang Seng is approaching overbought territory. It said, “Leading Chinese banks and Hong Kong property companies, which have been technically overbought, are expected to make a technical correction in near term.”
And then there’s the ever-present danger of yet another piece of scary news about the European debt crisis.
In other words, celebrate while you can. End
Hong Kong Blue Chips: +167, +0.8%, to 20,110, 1-20-12, Hang Seng Index
Chinese Stocks in Hong Kong: +8, +0.08 to 11,147, 1-20-12, HSCE Index
Shanghai Stocks: +1.3%, 2,298, 01-20-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: -0.2, 391.3, 01-19-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Blue chips rose above 20,00 on the last day of trading before the break next Monday through Wednesday for Chinese New Years. Local big banks surge after healthy gains by US banks KGI Asia. 1-20-12
Quotable: "The momentum should be able to maintain on the last trading day before CNY (Chinese New Year)
Chinese Company to Watch: "Google’s poor 4Q11 result should put pressure on Tencent (TCEHY). Short-term investors should consider taking profit on Tencent and wait for a better entry point at (HK)$160-$170.” Guoco Capital, 1-20-12
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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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