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Basic material, financial stocks outperform

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advance2 October 26, 2011 (Chinavestor) With so much volatility in the wake of European uncertainty, investors want to know how to weather the storm best. One way is to find stocks that are relatively safe. This is why we posted the following article earlier the month: Low risk stocks in turbulent times.

Another way to play current markets is by looking at sectors and stocks that performed well under current circumstances. Aluminum Corp. of China (NYSE:ACH) and Silvercorp Metals (NYSE:SVM) led basic materials higher for the week. China Finance Online (NASDAQ:JRJC), CNinsure Inc. (NASDAQ:CISG) and China Life Insurance (NYSE:LFC) have lifted financials since Monday while CNOOC Ltd. (NYSE:CEO) and Petrochina (NYSE:PTR) outperformed the markets from the energy sector. Stocks to avoid included China Real Estate Information (NASDAQ:CRIC) and China Ming Yang Wind Power (NYSE:MY) from capital goods. 

sector_20111026

The assumption with sector performance is the following. Should markets remain volatile, stocks that did well will continue to benefit and stocks/sectors that underperformed, will continue to do so. If this assumption is true, Aluminum Corp. of China (NYSE:ACH) and Silvercorp Metals (NYSE:SVM) looks like a good choice among financial and energy stocks. Oil producers, CNOOC Ltd. (NYSE:CEO) and Petrochina (NYSE:CEO), benefit from rising oil prices but Sinopec (NYSE:SNP) and Shanghai Petchem (NYSE:SHI) are adversely effected by rising oil prices. Refining margins shrink when price of oil goes higher.

Financial stocks did well for the week, small and large caps alike. In fact China Life Insurance (NYSE:LFC), the largest ion the sector, is the lackluster within the group.

Technology and transportation stocks, while advanced, have slowed down from earlier the month. Earnings season is going to shift to high gear for Internet and solar stocks in November!



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