Monday, 12 April 2010

China stocks fell on credit tightening fears in Asia

April 12, 2010 (Chinavestor) Chinese indices retreated in Asia as credit tightening fears sent developers lower. The Hang Seng Index (INDEXHANGSENG:.HSI) fell -70.3 points or -0.3% to 22,138.17 at the close. Airliners outperformed the market, each of the third largest carriers rose. Shares of China Eastern Airlines (HKG:0670) (NYSE:CEA) surged +1.5% while China Southern Airlines (HKG:1055) (NYSE:ZNH) and Air China (HKG:0753) rose +0.5%. Aluminum Corp. of China (HKG:2600) (NYSE:ACH) advanced +0.4%. But China Mobile (HKG:0941) fell -0.9% along a broad market decline. Steel and construction materials fell as investors shun real estate related stocks.

Trading in Shanghai was more bearish on Monday. The Shanghai Composite Index (SHA:000001) tumbled -16.08 points or -0.5% to 3,129.26 points at the close. The decline was universal, stocks that fell outnumbered those that advanced 10:1 out of the largest 50 listed stocks. NYSE cross-listed Aluminum Corp. of China (SHA:601600) (NYSE:ACH) and Petrochina Co. Ltd. (SHA:601857) (NYSE:PTR) fell only -0.4% but Sinopec(SHA:600028), Asia's largest refiner, tumbled -2.2%. China Life Insurance (SHA:601628) (NYSE:LFC), the largest Chinese life insurer, fell -1.9%.

If Hong Kong can serve as a proxy for U.S. listed Chinese shares expect Aluminum Corp. of China (NYSE:ACH), China Southern Airlines (NYSE:ZNH) and China Eastern Airlines (NYSE:CEA) do well but expect China Mobile (NYSE:CHL) to underperform on the NYSE today.
There has been heavy institutional selling of China Telecom (HKG:0728) in Hong Kong lately, as the following indicator testifies. This might explain the recent surge of China Mobile (NYSE:CHL) and China Unicom (NYSE:CHU).

The number of Chinese ADRs trading above 50-DMA is high and on the rise, a clear testimony of the bullish sentiment Chinese ADRs have enjoyed. The relative low number of overbought China ADRs suggest the rally was even and a sharp correction is not imminent.

Chinese and American indices along with major economic indicators have been trading in a narrowing range lately. But it looks like that the iShares FTSE/Xinhua 25 Index (NYSE:FXI) is ahead of the curve thus suggesting a correction is on the way.

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