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List of China Stocks Ripe for Bottom Fishing

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bottom_fishing_1 Feb. 8, 2010 (Chinavestor) Technical indicators are useful to a certain degree. When markets are trading at extremes, e.g. after a substantial fall or a rally, technicals will help investors separate darlings from the dogs. This is the case for China stocks at the moment - the oversold list is full of names while the overbought end lacks action - except for Baidu.com (NASDAQ:BIDU).

Stocks mentioned in this report include Origin Agritech (NASDAQ:SEED), China Automotive Systems (NASDAQ:CAAS), HSBC Plc. (NYSE:HBC), Aluminum Corp. of China (NYSE:ACH), WuXi Pharma (NYSE:WX) and Shanda Games (NASDAQ:GAME).

Looking at the oversold part of the China stock universe this morning, Origin Agritech (NASDAQ:SEED) is trading the closest to her theoretical low point.  While this may suggests a turnaround is around the corner, this may not be the case right now. Origin Agritech (NASDAQ:SEED) fell -13.3% for last week following weak quarterly earnings. The stocks has been a on a slide for over a month but when fundamentals are missing, sustainable recovery is out of question. Don't expect SEED to do much good for a short term.

China Automotive Systems (NASDAQ:CAAS) has been an extremely volatile stock in the past - and thus an oversold position suggests a pop up is a real possibility.

HSBC Plc. (NYSE:HBC), a Hang Seng Index heavy weight, is oversold and offers bottom fishing opportunity. Large cap stocks don't get to be so oversold as HSBC Plc. (NYSE:HBC) is right now.

The same is true for Aluminum Corp. of China (NYSE:ACH). Stronger dollar hurts commodity prices and commodity stocks as a result, a case with ACH at the moment. But a 25% slide for the third largest aluminum maker of the world in a month is certainly an extreme. Bottom fishers should pay attention right now.

For the rest of the oversold list, see chart below.

Most oversold Chinese stocks

OS-201028

The overbought end of the China stock universe is missing action - except for Baidu.com (NASDAQ:BIDU). The company will report earnings on Tuesday - and investors seem to be on strong numbers. Given that Baidu.com (NASDAQ:BIDU) has been reporting above analysts' estimates in the past, chances are that BIDU will report another blockbuster quarter.

Baidu.com earnings: consensus vs. actual

BIDU_earnings_estim_09

Source: Reuters


WuXi Pharma (NYSE:WX) and Shanda Games (NASDAQ:GAME) have some momentum left from last week left, according to the overbought monitor below.

Most overbought Chinese stocks

OB-201028

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