March 20, 2013
With More Money to Invest, Ping An Insurance Shines
 A popular way to pick China stocks these days is to focus on companies that will benefit new policies emanating from the National People’s Congress this month. That especially seems like a good idea because the Chinese economic recovery that just started seems to be losing a bit of traction, casting a cloud over stocks as a whole. However, investors shouldn’t ignore the fact the economy is still chugging along at better than 7% a year and some big, familiar companies are going to do well. One of those companies is Ping An Insurance (PNGAY), according to a recent research piece by UOB Kay Hian. The securities firm makes this suggestion even though the insurance giant recently missed its 2012 consensus earnings target by six percent. The decline was mainly due to losses on investment, as Chinese A-shares went through (more)…
March 19, 2013
Daphne Gets the Call in China Footwear Sector
 From the ground up is one sure way to reach China’s growing and increasingly fashion-conscious middle class. But footwear stocks met a rough patch in 2012, and picking a winner is not a sure thing. Last year was marked by a “growth setback” due to an “operating margin squeeze,” according to a research report by BOCOM International, the brokerage arm of China’s Bank of Communications (BCMXY). A difference in expansion tactics and valuation cause BOCOM Int. to prefer Daphne (DPNEY) in the footwear sector. Daphne focused 2012 spending on an operating system improvement and an increase in self-operated stores, the brokerage said. A main competitor, Belle (BELLY) took a different path. “For Belle, we see the operating cost further pressured by the higher and lengthened new store loss due to its continued aggressive store expansion (against the subdued sector landscape),” (more)…
March 18, 2013
Anton Oilfield Strikes Profits in China
 When the market is tough, one of the safest places to look is in areas the government policy-makers favor. That time is now and — according to Tanrich Securities Vice President of Sales, Jackson Wong – one of those sectors is shale gas and gas production. Chinese authorities want to boost production of shale gas because the country has a voracious appetite for more energy and a critical air pollution problem that can be partly addressed with relatively clean-burning gas. “Anton Oilfield (ATONY) is one of my favorite(s), because it just announced … terrific earnings, which earned almost three times as much in 2012,” Wong said in an email. ”With Schlumberger (SLB) own(ing) a 20% stake, I expect Anton can borrow some of the technologies from it and will shine in the shale gas industry this year.” The gas field (more)…
March 14, 2013
China Stocks Arrest Steep Decline — at Least for Now
 China stocks’ long-running consolidation threatened to get ugly this week, but good results from a telecom giant Thursday helped stop the downward slide. The Hang Seng Index in Hong Kong turned early losses into a 0.3% gain to 22,619 after China Mobile (CHL) offered good news with better-than-expected earnings. The index of Chinese companies rose 0.6% to 11,102. The market was already in the grip of a month-and-a-half consolidation when poor Chinese economic statistics plus Increased tightening by China’s central bank drove the Hang Seng 535 points lower the first three trading days this week. A steep drop by Hong Kong properties Thursday due to bank mortgage rate increases seemed sure to extend losses until China Mobile’s good results helped the index regain its footing above the 100 -day moving average of 22,556. But the worst may not be over, (more)…
March 13, 2013
China Stocks Tumble as Institutional Investors Retreat
 Institutional investors dismayed by Chinese monetary tightening and weak economic growth added to the sharp decline in China stocks Wednesday. Further tightening by the Chinese central bank, the People’s Bank of China, fueled a second day of steep losses in Hong Kong’s Hang Seng Index, which plunged 1.5% to 22,557 in increased trading. In two days the index has surrendered the hard-won 23,000 level and approached the support range of 22,400 to 22,500. The index of Chinese companies plummeted 2.3% to 11,037. In the good old days of September 2012 through January, foreign fund inflows helped trigger a strong rally in Hong Kong. But institutional investors began having second thoughts around the end of January, said Steven Leung, director of institutional sales at UOB Kay Hian. “The mood changed quite clearly after Chinese New Year (January 23) with a slight (more)…
March 12, 2013
Chinese Pharmaceutical Stocks Benefiting from Reforms
 While China stocks burrowed deeper Tuesday into a long-running consolidation, one analyst said reforms in China’s medical system should allow stocks in that sector to move ahead. The Hang Seng Index In Hong Kong started Tuesday with a gain, inspired by the powerful rally on Wall Street. However, as Mainland A-share markets tumbled and concerns about a slow-down in China’s economic recovery re-emerged, the index plunged to a 0.9% loss at 22,891 in lackluster turnover. The index for Chinese companies fell 1.3% to 11,292. The consolidation that started after the Hang Seng hit a 21-month high of 23,822 on January 30 still grips the market, said Castor Pang, head of research at Core Pacific Yamaichi. The index is fated to bounce around between 22,400 and 23,400 for the time being, he told Equities. But he noted that reforms in the (more)…
March 11, 2013
Economic Concerns Blunt China Stocks’ Momentum
 China stocks failed to maintain momentum from Friday’s rally as concerns emerged about the Chinese economy. Another record high on Wall Street Friday pushed Hong Kong’s Hang Seng Index above the 23,000 resistance level, but on Monday the index lost early gains to finish one point lower at 23,091. Turnover was weak. The index of Chinese companies sank 0.4% to 11,436. Weak growth in imports, which reflected a lackluster economic recovery, and higher-than-expected inflation cut short any chance China stocks had of breaking out of a consolidation that is now lasted almost a month and a half. The Hang Seng’s support level is the 10-day moving average, 22,783, according to Jackson Wong, vice president of sales at Tanrich Securities. He sees resistance at 23,500. One sector that looks attractive is Chinese securities, which have benefitted from recent financial reforms, Wong (more)…
March 8, 2013
Rising Global Tide Lifts China Stocks
 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 (more)…
March 7, 2013
China Stocks: the Case for a Rebound
 China stocks’ consolidation continued on Thursday to grind on. The opening of China’s National People’s Congress and start of corporate reporting season have not so far brought the hoped-for relief. In yesterday’s column one analyst suggested that liquidity woes might plague the market through the second quarter this year. But there is another view: the current malaise offers a buying opportunity prior to a rebound in a few weeks. For Thursday though, the picture was not pretty. The Hang Seng Index in Hong Kong inched 0.03% lower to 22,771 in reduced turnover, and the index of Chinese companies fell 0.4% to 11,311. Since a five-month rally lifted the Hang Seng 24.4% to a 21-month high on January 30, the index has given up 4.4%, promptly retreating from any attempt at a rebound. Fear not, says Eric Yuen, head of research (more)…
March 6, 2013
Wall Street Exuberance Boosts China Stocks — Temporarily
Exuberance – rational or not – spread to China stocks Wednesday from Wall Street after the Dow’s record-high close. But the next few months might not be so happy for the Hong Kong and China market, according to one analyst. The Hang Seng Index jumped 1.0% to 22,778, and the index of Chinese companies in Hong Kong surged 1.7% to 11,359. But the gains did not mark the restart of a strong rally that ended abruptly in February, said Steven Leung, director of institutional sales at UOB Kay Hian. “Technically the mood is not good,” he told Equities. “Some liquidity is leaving Hong Kong as profit-taking.” For the short term, Leung doesn’t see much news coming in the next few days from China’s on-going National People’s Congress capable of boosting overall stock prices. “I think 22,500 provides some support, but (more)…
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