March 26, 2010 (Chinavestor) Shares of Chinese companies got an enormous boost on Friday as Chinese regulator approved stock-index futures, short selling and margin trading in Shanghai. But the rally is biased toward large cap stocks, as was expected, due to their large trading volume. The iShares FTSE/Xinhua China 25 Index (NYSE:FXI) is up 1.8% at noon. Large cap, highly liquid stocks are expected to make up most of the index futures market, driving additional volume and price appreciation along the road.
This assumption, e.g. larger cap stocks will benefit the most, proved to be right. Four out of the the best five stocks measured by percent price change are NYSE listings from the China stock universe. Trina Solar (NYSE:TSL) enjoyed an analyst upgrade pulling the rest of the solar sector. ReneSola Ltd. (NYSE:SOL) advanced +7.0% by noon. Shares of Yanzhou Coal (NYSE:YZC) jumped +7.0% - but this was no surprise after a similar rally in Hong Kong earlier the day. China GrenTech Corp. (NASDAQ:GRRF) is showing strength before earnings release on April 1.
Contrary to the best stocks, NASDAQ listed China plays dominate the biggest percentage losers on Friday. Xinhua Sports & Entertainment Ltd. (NASDAQ:XSEL) tumbled at 11: A.M. followed by China-Biotics Inc. (NASDAQ:CHBT) and Agria Corporation (NYSE:GRO). Ctrip.com (NASDAQ:CTRP) retreated from 52 week highs - but today's weakness is more of a technical correction then a fundamental change. Shares of China Housing & Land Development, Inc (NASDAQ:CHLN) surrendered -2.5% by noon on Friday.
There are six solar plays among the best ten China stocks at noon on Friday. Trina Solar (NYSE:TSL) is followed by ReneSola Ltd. (NYSE:SOL), Canadian Solar (NASDAQ:CSIQ), Suntech Power (NYSE:STP), just to name a few. Trina Solar leads solar sector higher.
Shares of Yanzhou Coal (NYSE:YZC) didn't give much of a trading opportunity for day traders after gapping up over 6% right at the open. But the strong open was no surprise, China Shenhua (1088.HK), the largest Chinese coal miner, was the best performing component of the 42 member Hang Seng Index on Friday. H-shares of Yanzhou Coal (HKG:1171) advanced +3.7% while China Coal (HKG:1898) rose +3.0%. China shares jump in Asia on stock index futures.
China GrenTech Corp. (NASDAQ:GRRF) is fighting the $3.50 resistance level before earnings announcement on April 1. Shares of the company broke thought $3.50 on March 8 with huge underlying volume, but failed to gain traction and have eroded all the gains until today.
Though not a stock, the strong performance of the iShares FTSE/Xinhua China 25 Index (NYSE:FXI) is worth giving it a second thought. ICBC (HKG:1398), the largest financial institution in the world, reported 2009 net profits of $18.954 billion, surpassing even Goldman Sachs' record 2009 numbers. While ICBC is not listed on the NYSE, China stocks investors interested in financial exposure should look into the FXI because it's significant financial sector exposure. ICBC dethrones Goldman as the most profitable financial institution.
iShares FTSE/Xinhua 25 Index (NYSE:FXI) Portfolio Allocation as of 1/31/2009
Stocks on the negative include smaller cap, less liquid Chinese stocks - except for Ctrip.com (NASDAQ:CTRP). Shares of the company hit three months lows in early February following earnings announcement. While the stock suffered heavy blows on disappointing outlook, we remained optimistic ""Considering that business outlook, e.g. revenue guidance, is always subject to change, my reading on current financial report is much better then those investors who sold it last night. Time will tell who was right" Ctrip '09 Q4 disappoints. How bad is it?