Feb. 13, 2010 (Chinavestor) Two main factors were driving Chinese stocks for the week: earnings and economic data. Some of the most prominent earnings releases came from Baidu.com (NASDAQ:BIDU), JA Solar Holdings (NASDAQ:JASO) and 3SBio Inc. (NASDAQ:SSRX). Earnings calendar for the upcoming week is light: China Precision Steel (NASDAQ:CPSL), KongZhon Corp. (NASDAQ:KONG) and Hutchison Telecom (NYSE:HTX) are scheduled to report fourth quarter earnings.
Most of the news moving markets came from Europe and China. Greece's ills spread fears to international markets and pressured the euro until Germany assembled a large aid package to help its troubled partner in the currency zone. The good news came from China later the week. First, strong economic data combined with low inflation pushed commodity, mining and construction shares higher on Thursday. January CPI reading came out 1.5% from a year earlier, down from 1.9% in December. Easing inflationary pressure eased fears that China will have to increase interest rates. Prospects of a loose monetary policy gave boost to equity markets world wide, sending Chinese indices breaking through psychologically important barriers this week: the Shanghai Composite broke though the 3,000 level while the Hang Seng Index closed above the 20,000 mark. Besides inflation, investors got the latest update on property prices, loan growth, and auto sales this week. Property prices increased the most in 21 months in January suggesting strong demand will keep property developers busy. January lending topped forecast and amounted to the last three months combined. Some reads it as a sign that Chinese banks are pushing lending ferociously before the government starts curbing lending. The number of autos sold in January hit another record with 1.3 million units as government tax and subsidy policies continued to spur buying.
The bad news came after the markets closed for the Chinese New Year on Friday. Chinese bank regulators increased the required reserve ratio for the second time in 2010 to curb lending. Monetary tightening sent European and American markets south but strong earnings from the U.S. tech sector helped American markets end the week higher.
We had some market heavy weights reporting for the week. Baidu.com (NASDAQ:BIDU), the largest Chinese NASDAQ listed company, reported better-then-expected revenues and profits for the fourth quarter of 2010 on February 9 after the close. The stock jumped $47 or 10% in post-market trading and rose over 10% for the trading days as investors snapped up shares of the company. BIDU became overbought- according to our overbought monitor.
A low key stock, 3SBio Inc. (NASDAQ:SSRX) reported descent fourth quarter earnings and guided 2010 revenues in-line with expectations, but looks to be trading at a discount at the moment.
A highly watched company, JA Solar Holdings (NASDAQ:JASO), reported better-then-expected on February 10 and guided higher for 2010. This is the first Chinese solar company reporting Q4 numbers, suggesting more surprises to the upside are on the way from the rest of the sector. JA Solar (NASDAQ:JASO) rose 12.28% for the week, helping shares of Trina Solar (NAYSE:TSL) and Suntech Power (NYSE:STP) among others.
The upcoming week is going to be relatively light thanks to the Presidents' Day Holiday on Monday and the Chinese New Year, a week-long holiday in Shanghai and a two-day shut down for the Hong Kong Stock Exchange.
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