Hong Kong’s Hang Seng Index sank 0.4% to 19,963 in light turnover Thursday as the market stalled after a strong three-week rally. The index of Chinese companies fell 0.4% to 9,742.
The Hang Seng is trading up-and-down this week after climbing 7.5% since July 25 on hopes central banks in China, Europe and the U.S. would ease monetary policies.
The hope lives on, but a spate of profit-warnings from Chinese companies and so-so results is dampening market sentiment. The slowdown in Chinese economic growth in the first half of the year is the main culprit for corporate blues.
“More companies have adjusted earnings downward, including big banks and telecoms,” said Peter So, managing director and co-head of research at CCB International. “It’s a trend.”
CCB International is the brokerage arm of the giant China Construction Bank.
That downtrend in earnings might push the Hang Seng lower in the short term to test support at 19,300, So told Equities.
He said there is a good place for investors to shelter while the market struggles: “The power sector is attractive partly because of the lower price of coal. It’s a safe haven for investors to park their money.”
Hong Kong Blue Chips: -89, -0.4%, to 19,963, 08-16-12, Hang Seng Index
Chinese Stocks in Hong Kong: -37, -0.4%, to 9,742, 08-16-12, HSCE Index
Shanghai Stocks: -7, -0.3% to 2,112, 08-16-12, Shanghai Composite Index.
Chinese Stocks in the U.S.: +1.8, 383.4, 08-15-12, Bank of New York Mellon, ADR Index-China
Insight: Hong Kong blue chips opened 99 points higher but couldn’t hold on to gains, ending slightly lower in weak turnover. China Mobile (CHL) fell 5.0% after profits came in at the lower end of expectations. KGI Research
Quotable: “The first resistance would be 20,300, while next resistance would be seen at 20,500. For support, the first support would be 20,000, while next support would be seen at 100DMA (19,736).” KGI Asia. 8-16-12
Chinese Company to Watch: China Resources Cement (CARCY) BUY “Management expects cost savings from the lower coal price in 2Q12 would start to help margins in Sep 12 because of the at least 1-month time lag in inventory.” UOB Kay Hian Holding. 8-16-12
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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