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Energy, GS weights on Chinese stocks by noon, April 16, 2010

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decline April 16, 2010 (Chinavestor) Price of oil fell -2.8% to $83.12 a barrel from over $68 last week, sending shares of Chinese energy stocks tumbling. Shares of PetroChina Company Limited (NYSE:PTR), the largest Chinese oil producer, fell -1.93% while CNOOC Ltd. (NYSE:CEO), China's off-shore oil specialist, tumbled -2.7% by noon on Friday. Chinese solar stocks suffered as well. Most of the sector was overbought before the open putting industry leaders of the sector in a vulnerable position.

Stocks with the biggest reversals include AirMedia Group Inc. (NASDAQ:AMCN) and BMP Sunstone Corp. (NASDAQ:BJGP). These companies have lost all gains from a day earlier. Xinhua Sports & Entertainment Ltd. (NASDAQ:XSEL) have continued to tumble from yesterday following news that 2009 Q4 earnings release was delayed from April 20 to May 10, 2010.

Big losers of the day - measured in percentage point change - include CNinsure Inc. (NASDAQ:CISG), Canadian Solar (NASDAQ:CSIQ), China Telecom (NYSE:CHA) and Aluminum Corp. of China (NYSE:ACH).

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Details. The correlation between the price of oil and stock price of Chinese oil companies is evident. Petrochina Co. Ltd. (NYSE:PTR) and CNOOC Ltd. (NYSE:CEO) derive most if not all of their revenues from oil sales. Just how sensitive they were to the price of oil change, read following related articles: Petrochina 2009 net down on lower oil price. For CEO, read Lower oil price dents into net 2009 for CNOOC.

Most Chinese solar stocks were overbought before the market open. Small cap Canadian Solar (NASDAQ:CSIQ) is down on industry weakness, not on stock specific news. We wrote this morning that "Vulnerable stocks on the overbought screen include China Mobile (NYSE:CHL), Changyou.com (NASDAQ:CYOU) and five Chinese solar makers: Yingli Green Energy Holdings (NYSE:YGE), Suntech Power (NYSE:STP), LDK Solar (NYSE:LDK), Trina Solar (NYSE:TSL) and Solarfun Power Holdings (NASDAQ:SOLF)." It proved to be a prudent call... Overbought and oversold China stocks to watch on Friday.

The fall of AirMedia Group Inc. (NASDAQ:AMCN) and BMP Sunstone Corp. (NASDAQ:BJGP) are a clear testimony that small cap China stocks remain volatile and that Wall Street isn't just a one way road. Stocks that go up can just as fast come down... There isn't any long term trend visible for any of these stocks.

Xinhua Sports & Entertainment Ltd. (NASDAQ:XSEL) is somewhat different. The excitement ahead of earnings release earlier this week was overshadowed by news that the company is going to delay 2009 Q4 earnings for over three weeks. While this doesn't mean that earnings will be disappointing automatically, some investors resemble this story to Fuqi International (NASDAQ:FUQI), a stock that tumbled on a somewhat different occasion. FUQI not only delayed financial reports, as is the case for XSEL, but had to restate all of 2009 quarterly reports - prompting lawsuits from left to right.

The over -10% tumble of CNinsure (NASDAQ:CISG) raises eyebrows - and for a good reason. The five day price chart suggests the stock fell off the cliff... Again, small cap China stocks are extremely volatile - especially in a hostile market environment such as today.

China Telecom (NYSE:CHA) fell on sector rotation - there is no company specific news out there. But shares of the company fell just as hard in Hong Kong earlier today while rival China Unicom (NYSE:CHU) advanced. We have just issued a comprehensive analysis of the situation today: Rotation within the Chinese telecom sector.

Aluminum Corp. of China (NYSE:ACH) fell -6.51% by noon on Friday. Construction material related companies fell hard following news that Chinese real estate prices rose a record 11.7% in March and urban fixed asset investment jumped 26.4% YoY. Investors bet that China will clamp down on the property sector to prevent asset price bubbles hurting construction material stocks. Weak earnings from Alcoa Inc. (NYSE:AA) didn't help either...

 



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