Uncertainty Dogs China Stocks

Gene Linn |

Uncertainty reigns in China stocks with a tepid rebound Monday indicating investors are not quite ready to jump in to reverse the February consolidation.

Hong Kong’s Hang Seng Index managed a small bounce back from last week’s losses, rising 0.2% to 22,820 in thin turnover. The index has skidded 1,002 points since reaching a 21-month high in late January. The index of Chinese companies edged up 0.2% to 11,334.

“There are lots of things going on this week so the market is still trying to find a bottom while investors are waiting for a good entry point once the market stabilizes,’’ said Jackson Wong, vice president of sales at Tanrich Securities.

He told Equities in an email the Hang Seng might find solid support at 22,700, the opening level for 2013, but it might sink to 22,500 if bad news emerges.

And there should be plenty of news this week. The U.S. faces a Friday deadline for avoiding potentially damaging spending cuts, an election in Italy will affect the region’s debt crisis and blue chips start to announce results in Hong Kong.

Recent news has done nothing to lift the market’s gloom: China’s foreign direct investment sank for the eighth-straight month in January, and a preliminary PMI figure for Chinese February manufacturing declined from a two-year high in January.

With any overall market upturn uncertain, Wong likes Chinese properties and financials. The government’s steps to slow property price increases were not harsh, he said, and financials have fallen enough recently to provide good value. End

DAILY FIX

Hong Kong Blue Chips: +38, +0.2%, to 22,820, 2-25-13, Hang Seng Index

Chinese Stocks in Hong Kong: +17, +0.2%, to 11,334, 2-25-13, HSCE Index

Shanghai Stocks: +12, +0.5%, to 2,326, 2-25-13, Shanghai Composite Index.

Chinese Stocks in the U.S.: +3.2, 381.4, 2-22-13, Bank of New York Mellon, ADR Index-China

Insight: Hong Kong opened higher after Friday's big rebound in U.S. stocks, but failed to pick up momentum in thin, cautious trading. Hong Kong properties lost ground after the government announced strong measures to curb property price increases: SHK Properties (SUHJY) -1.3%. KGI Research

Quotable: "The benchmark index may continue under pressure, negatively affected by weak market sentiment." BEA Securities. 2-22-13

Chinese Company to Watch: Sunny Optical (2382, HK) "The substantial growth of handset camera modules in Jan reflected the company’s leading market position and favorable outlook. The company will release the 2012 annual results on March 10th." BOCOM International. 2-25-13

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
MA Mastercard Incorporated 101.19 -0.26 -0.26 686,390

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