July 10, 2010 (Chinavestor) – Short week, so what? Apparently that was the thought of the bulls as U.S. equities enjoyed their best week in a year. Since July 2nd, all three major U.S. indexes are up more than 4%, but Chinese stocks have a run in the sun as well and that is an appropriate metaphor as well discuss later. The Shanghai Composite Index (SHA:000001) and the Hang Seng Index (INDEXHANGSENG.HSI) both enjoyed solid weeks as well. Highlighting the strength in Shanghai was a 2.3% gain on Friday after failed AgBank IPO subscriptions sent money flowing into other stocks. The trade was so strong in Shanghai on Friday that only three of the exchange's 911 listed stocks closed in the red.
China-specific ETFs enjoyed strong runs this week as well with the iShares/FTSE Xinhua China 25 Index (NYSE:FXI) and the PowerShares Golden Dragon Halter USX China ETF (NYSE:PGJ) both gaining about 4%. Small-caps outperformed with the Claymore/AlphaShares China Small-Cap ETF (NYSE:HAO) gaining 5% on the week.
All of those performances pale in comparison to the 14% surge offered by the Claymore/MAC Global Solar Energy ETF (NYSE:TAN), home to several Chinese solar names, which was up 14% this week. Among the top four Chinese stocks for the week, three were solar names, led by JA Solar (Nasdaq:JASO), which popped by more than 21%. Solarfun Power (Nasdaq:SOLF) and Suntech Power (NYSE:STP) both surged by more than 21% as well. Canadian Solar (Nasdaq:CSIQ) was the laggard of the group, gaining “just” 12.82%.
General Steel (NYSE:GSI) led the winners with a gain of almost 21.5%, but there was a distinct lack of headlines to explain the bullish sentiment and volume in the name was thin on Friday. The same goes for China Real Estate Information (Nasdaq:CRIC), which added 18% on the week, including a no-news low-volume gain of almost 7% on Friday.
E-House (NYSE:EJ) was one real estate winner, adding almost 15% on the week. We also saw some strength in agriculture names, led by Origin Agritech (Nasdaq:SEED), which popped by 14%. FocusMedia (Nasdaq:FMCN) and AsiaInfo (Nasdaq:ASIA) both added more than 13%.
The losers sported palatable losses for the most part. Semiconductor Manufacturing International (NYSE:SMI) slid by almost 12% on news of a dilutive secondary share offering. China Technology Development (Nasdaq:CTDC) led the losers with a drop of more than 13%, but news was scant to explain the downdraft.
Not all real estate names participated in the rally, as China Housing & Land Development (Nasdaq:CHLN) tumbled 8.26%. HQ Sustainable Maritime Industries (NYSE:HQS) continued its bearish ways, losing more than 8% on the week. Travel services provider eLong (Nasdaq:LONG) shed 6.5% on no news. The stock was probably dragged down by a 4% loss in larger rival Ctrip.com (Nasdaq:CTRP).
China BAK Battery (Nasdaq:CBAK) and oil service provider WSP Holdings (NYSE:WH) both lost more than 4% on the week. American Dairy (NYSE:ADY), CNinsure (Nasdaq:CISG) and GigaMedia (Nasdaq:GIGM) all lost more than 5%.
Looking forward, Chinese economic news will be in focus next week, including second quarter GDP, CPI, PPI and retail numbers. Expect volatility to raise for both the Shanghai Composite Index (SHA:000001) and the Hang Seng Index (INDEXHANGSENG.HSI). The iShares/FTSE Xinhua China 25 Index (NYSE:FXI), a large cap China ADR proxy, and the PowerShares Golden Dragon Halter USX China ETF (NYSE:PGJ) are positioned well to take advantage of positive market news. Small-caps might do better than large caps if economic numbers disappoint. This may make the Claymore/AlphaShares China Small-Cap ETF (NYSE:HAO). come handy under such circumstances.
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