Worries from China and Europe Sink China Stocks

Gene Linn  |

China stocks took another beating Tuesday as weak mainland markets and lack of resolution of the Greek debt bailout problem piled on to earlier fears of a fiscal crisis in the U.S.

Hong Kong’s Hang Seng Index dropped 1.1% to 21,189, and the index of Chinese companies tumbled 2.0% to 10,230. The Shanghai Composite Index sank 1.5% to 2,048. The Hang Seng plunged 3.2% last Thursday and Friday on worry the U.S. government could not avoid a fiscal crunch in the new year.

With concerns from across the globe weighing on the market, the 15.5% rally for the Hang Seng in September and October seems like a distant memory. Gains were partly fueled by prospects for a rebound in the Chinese economy. But those prospects offer scant support now, according to Steven Leung, director of institutional sales at UOB Kay Hian.

“Investors have discounted the recovery story,” he told Equities.

And although new Chinese leaders are being named in the on-going 18th Party Congress, Leung said investors don’t expect fundamental moves to stimulate or reform the economy until the National People’s Congress meets in March.

In the meantime China may speed up some infrastructure projects. Leung said this will benefit China Railway Construction (CWYCY) and China Railway Group (CRWOY). End


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Hong Kong Blue Chips: -242, -1.1, to 21,189, 11-13-12, Hang Seng Index

Chinese Stocks in Hong Kong: -213, -2.0%, to 10,230, 11-13-12, HSCE Index

Shanghai Stocks: -31, -1.5% to 2,048, 11-13-12, Shanghai Composite Index.

Chinese Stocks in the U.S.: +0.5, 381.3, 11-12-12, Bank of New York Mellon, ADR Index-China

Insight: Losses on Mainland markets dragged down Hong Kong in slightly heavier trading. Cement producers continued to drop: CNBM (CBUMY) -3.4%. KGI Research

Quotable: "Amid concerns on US fiscal cliff, global stock market including HK market turned weak recently. Besides, funds flow into HK market has also showed sign of slow down while HK market turnover shrank again." KGI Asia. 11-12-12

Chinese Company to Watch: China Communications Construction Co. (CCCGY) "Due to the Company's unique information advantages in the mainland road planning and subsequently forward-looking judgment of future road network distribution and traffic flow change, the Company investment business enjoyed obvious advantages." Phillip Securities. 11-12-12

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

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