Lull in U.S. Bad News Perks Up China Stocks

Gene Linn |

Still connected at the hip to news from the U.S. and Europe, China stocks in Hong Kong took advantage of stable prices on Wall Street overnight to stage a sharp rally.
Investors also are looking for good news from big speeches by President Barack Obama and U.S. Federal Reserve chairman Ben Bernanke on Thursday, Benny Wong, director of research at BOCOM International, told Equities. "It's not likely they would give speeches to announce bad news," he said.
The blue-chip Hang Seng Index jumped 1.7%, 338 points, to edge above the 20,000 resistance at 20,048. However, turnover was thin. The index of Chinee companies gained 1.9%, 198 points, to 10,545. The rises were in line with a surge of 1.8% in Shanghai's benchmark Composite Index to 2,616.
Chinese cement producers, big losers in recent days, rebounded. Anhui Conch (0914 in Hong Kong) rose 1.5%, Large Chinese banks ICBC, CCB and China Merchants Bank climbed more than 2%.
ICBC (0398) is attractive after posting an interim profits rise of 29%, according to KGI Asia. The prospective PE of 7.2X is also appealing, KGI said.
But overseas news can turn bad in the blink of an eye. One major concern is that the German Constitutional Court will issue a ruling overnight Wednesday that will make it more difficult or even impossible.

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