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China's top sportswear firm Li Ning has been hit hard by oversupply in the market.  Photo: Li Ning

Translated by Andrew Vanburen from a Chinese-language piece in Sinafinance

WHILE MANY PEOPLE took refuge last week from the fall of the “Brothers who build Hong Kong,” others like me with heavy exposure to consumer plays were suffering as well.

Take for instance the recent declines of sportswear firm Li Ning.

There are simply too many sneakers out there with not enough feet in the market.

The Hong Kong stock market took quite a dive on Friday, dragged down by the shocking and equally sudden arrests of the Kwok brothers of Sun Hung Kai Properties (HK: 16) on corruption charges.

The two property tycoons are often credited with being largely responsible for the modern face of Hong Kong’s iconic skyline, and their sudden fall from grace put a big damper on sentiment in the Special Administrative Region’s capital market late last week.

And although it must be said that other than SHK Properties, most counters held their own on Friday, I still ended up losing money.

The chief reason has been my stubborn insistence on sticking with the country’s top athletic footwear maker – Li Ning (HK: 2331) – and my persistent belief that the hazards of widely reported overcapacity in the market can be overcome by this Hong Kong-listed sportswear play’s exposure to the much hyped “China consumption story.”

Li Ning fell by 4% in one day and I had had enough and rid my portfolio of the world’s third largest sportswear apparel firm, hoping to cut my losses in the process.

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The Kwok Brothers of Sun Hung Kai Properties helped transform the face of Hong Kong. But their recent arrest on corruption charges put a damper on the market.  Photo: SHK



Another of my recent favorites that had a day to forget was precision steel-cutting tools and die steel maker Tiangong International (HK: 826) which performed even less favorably.

The recent pow-wow between some of the world’s leading powers aimed at keeping rising oil prices at bay seemed to do the trick for now.

But although motorists will celebrate, this was not good news for my shares in MIE Holdings Corp (HK 1555), an independent upstream oil company operating onshore in China, as it thrives on higher crude prices.

Another of my picks, wind farm and natural gas play China Suntien Green Energy (HK: 956), also fell on a technical selloff, further taking the spirit out of my upcoming weekend.

And despite the fact that I did manage to remove some of these before the bloodletting began and successfully bought back a fair share in the afternoon session, the day as a whole was a resounding loss for my portfolio.

But things could have been a lot more dour had I not waited until the very end of the trading day to pick up shares in rare earth miner China Lumena New Materials (HK: HK) as well as restocking shares in China Suntien Green Energy, as share values for both resource firms continued to fall throughout the day right up to the closing bell.

I therefore was able to end the week on a slight high, although it had the feeling of a consolation prize.

And I for one am very content to buy back those shares who hit their intraday low at the closing bell on Friday.

That helps me sleep a bit better over the weekend and let Monday morning bring what it may.

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