China stocks ended the week on a high note Friday, rising on a tide of optimism about the global economy.
The Hang Seng Index in Hong Kong surged 1.4% to 23,092 in moderate turnover, edging back over the 23,000 level, and the index of Chinese companies rose 1.5%. After a lackluster four days of trading, the gains allowed the Hang Seng to rise 0.9% this week, while Chinese companies added 1.3%.
The U.S. Dow index hit almost daily record highs this week as the dark employment picture brightened a bit to lead global stocks higher. Encouraging Chinese export numbers helped the Hong Kong market on Friday.
In addition, moves by the European Central Bank on Thursday lifted risk appetite, as evidenced by rising commodity prices, said Ben Kwong, chief operating officer at KGI Asia.
Next week should continue to be positive for China stocks, he told Equities in an email. However, gains may be capped while investors wait for news from China’s on-going National People’s Congress.
“For the China market, all eyes are on the NPC, to see any macro or sector policies to be released,” Kwong said.
Anticipation is building for the press conference to be held March 17 by China’s new leaders, as investors look for signs of needed new reforms and of steps to stimulate the economy, he said.
Until China’s macro direction clears, according to Kwong, investors will focus on stocks with good earnings reports and on sectors like the environment that benefit from government policies. Exporters and shipping companies might also gain from stronger U.S. employment figures and the U.S. stock rally. End
Hong Kong Blue Chips: +321, +1.4%, to 23,092, 3-8-13, Hang Seng Index
Chinese Stocks in Hong Kong: +173, +1.5%, to 11,484, 3-8-13, HSCE Index
Shanghai Stocks: -6, -0.2%, to 2,319, 3-8-13, Shanghai Composite Index.
Chinese Stocks in the U.S.: +0.6, 378.0, 3-7-13, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong opened higher and blue chips expanded gains to rise above the 20-day moving average and the 23,000 resistance level. Turnover continued to be moderate. Heavyweight blue chips attracted buying. China Mobile (CHL) climbed 1.0%, and oil company CNOOC (CEO) added 2.3%.KGI Research
Quotable: “China stocks on Thursday halted the two-day winning streak on concern the country’s securities regulator may soon restart approving new share offerings.” Core Pacific Yamaichi. 3-8-13
Chinese Company to Watch: “With Chinese banks’ annual results season kicking off soon, we believe the spotlight will return to fundamentals and key trends of banks. As such, ICBC (IDCBY) remains our preferred pick as the bank offers decent asset quality, solid and balanced fundamentals and undemanding valuations.” UOB Kay Hian. 3-8-13
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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