Feb. 27, 2010 (Chinavestor) Stock markets traded sideways for the week giving no indication which sectors or stocks are going to move. Earnings have stated to come out once the Chinese New Year was over. As a result, trading was choppy with no indication what the first week of March is going to be.
Economic indicators are mixed for the U.S. Soft home sales numbers and higher unemployment are a reminder that the recovery will be gradual and slow - but better than expected GDP reading suggests the picture is not so dark. China has her own challenges stemming from uncertainty how the exit from the stimulus will play out. Some fear a hard lending is the more likely scenario after record lending in 2009 and in January 2010 have likely contributed to the increase of non-performing loans. Investors remained cautious in China; the Shanghai Composite Index shed -2.85% while the Hang Seng Index rebounded +3.59% for the week.
Asian economic indicators for the upcoming week include Japan's unemployment number and household spending on Tuesday. Chinese PMI index will be released the week as well and is expected to show a healthy expansion in manufacturing activity for February.
Some of the key earnings belonged to NetEase.com Inc. (NASDAQ:NTES), one of the leading companies from the Chinese online game developer and operator sector. Revenue and earnings grew from previous quarter but online game margins slimmed. Online advertisement margins improved making up for most of the weakness in the game sector. The markets gave earnings of NetEase.com Inc. (NASDAQ:NTES) a nod and lifted her share price +2.94% for the week. More coverage : NetEase.com Q4 profit increase- more than facts.
Trina Solar (NYSE:TSL) is a heavy weight from the solar sector. The company reported strong revenue growth with better than expected gross margins of 32.6%. The bad news was a warning that margins are likely to slip to 26%-28% for 2010 first six months, sending her shares down -9.87% for the week.
Shares of China Eastern Airlines (NYSE:CEA) advanced five days in a row sending her shares +13.9% higher for the week. February has been an extremely good month for airliners and for China Eastern Airlines (NYSE:CEA) in particular; shares of CEA advanced +28.24% for February. While CEA has not reported 2009 fourth quarter earnings yet, Singapore Airlines and Cathay Pacific did. With the Shanghai Expo 2010 around the corner, analysts expect CEA to get the lion share of international travel in and out of the city, bringing in tens of millions of visitors for the event.
China Unicom (NYSE:CHU), the second largest Chinese mobile carrier, jumped +8.18% on Friday following a Deutsche Bank upgrade from Sell to BUY. All major three carriers have reported January operational statistics earlier the week with mixed results. Related story: China Unicom lags despite improved January statistics.
Looking at the best performing Chinese ADRs for the week, Semiconductor Manufacturing (NYSE:SMI) took the lead with a +19.59% advance. Highly volatile, smaller cap NASDAQ names followed suit. China Automotive Systems (NASDAQ:CAAS) continued the recovery from February lows and another car company, Wonder Auto Technology (NASDAQ:WATG), advanced over 10% as well. Interestingly, Tongxin International (NASDAQ:TXIC) failed to gain as much traction for the week despite issuing a 2009 revenue guidance above analysts estimates this week. China's February auto sales numbers are expected to remain strong with healthy margins. Chinese investors snapped up shares of SAIC Motor Corp. (SHA:600104) this week, making it the best performing stock from the SSE-50 Index.
Top Ten China Stocks of the Week
Earnings will be in focus for the upcoming week. Shanda Games (NASDAQ:GAME) and her parent company, Shanda Interactive (NASDAQ:SNDA), are going to report before the market opens on Monday. Shanda Games (NASDAQ:GAME) is the largest online game operator and developer in China and her earnings will have impact on the rest of the sector. While NetEase.com (NASDAQ:NTES) and Changyou.com (NASDAQ:CYOU) have already reported and thus will be less effected, expect additional volatility for Giant Interactive (NYSE:GA). Perfect World (NASDAQ:PWRD) is going to report on Monday.
Another key earnings is coming from Suntech Power Holdings (NYSE:STP), the largest Chinese solar maker measure by market cap. With Trina Solar (NYSE:TSL) already reported, investors will get a fairly good picture about the overall financial health of the industry. Expect high volatility for smaller solar stocks such as Canadian Solar (NASDAQ:CSIQ) and Yingli Green Energy (NYSE:YGE).
For a complete earnings calendar for the upcoming week, visit China Stocks Earnings Calendar March 1-5.
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