China stocks continued to tumble Monday, dragged down by the unfolding European debt crisis. Worry that the U.S. congressional “Super Committee” will fail this week to come up with a deficit reduction plan is adding to market jitters.
The Hang Seng Index in Hong Kong fell 1.4% Monday to 18,226, and the index of Chinese companies sank 2.3% to 9,726. Turnover was very weak.
The Hang Seng has dropped to the half-way mark of its big October rally, according to Jackson Wong, vice president of equity sales at Tanrich Securities. He told Equities in an email he expects the market to trade around 18,000 this week.
“Things are very sluggish and no one wants to get in the market unless some positive catalyst comes in,” he said.
Some cautious traders are turning to defensive stocks, primarily telecoms and utilities. Investors are parking their money into power companies such as CLP (CLPHY) and Power Assets (HGKGY),” Wong said.
Among telecoms, China Unicom (CHU) rose 1.1% Monday due to better-than-expected new 3G additions, he said. End
Hong Kong Blue Chips: -265, -1.4%, to 18,226, 11-21-11, Hang Seng Index
Chinese Stocks in Hong Kong: -232, -2.3% to 9,726, 11-21-11, HSCE Index
Shanghai Stocks: -0.06%, 2,415, 11-21-11, Shanghai Composite Index.
Chinese Stocks in the U.S.: -1.3, to 375.0, 11-18-11, Bank of New York Mellon, ADR Index-China
Insight: China stocks opened lower and continued to fall in Hong Kong Monday, weighed down by worry over European debt and possible failure of the U.S. deficit-reduction Super Committee. However, blue chips found support at 18,000 and trimmed some losses before the close. Chinese banks fell on concerns over bad debts: ICBC (FXI) -3.2%. Cement producers also slipped: Anhui Conch (AHCHY) -4.7%. KGI Research
Quotable: “News from Europe will continue to govern the market direction.” BOCOM International. 11-21-11
Chinese Company to Watch: Digital China (STV) information technology products and services “As we expect the Company’s profit to grow by nearly 20% this year, the current PEG (price/earnings to growth) ratio is far below 1, which indicated that a fair valuation. Investors are advised to bargain hunt for this stock when its price retreats to a lower level.” CFSG. 11-18-11
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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