Thursday is just as Tuesday or Wednesday this week: stocks rocked the house in Shanghai but China H shares continue to fall in Hong Kong. In the meantime U.S. index futures point to a narrow open.
Taking a close look at the domestic stocks exchange in China, the Shanghai Composite Index <.SSEC> rose 43.78 points or 1.6% to 2,853.90, a new record for 2009. The World Bank increased GDP forecast for China to 7.2% from 6.5% earlier this year. Chinese domestic funds snapped up assets of financials, banks, basic materials and such. China Shenhua, the largest Chinese coal miner, rose 5.5% while Industrial & Commercial Bank of China (601398.SS: Quote, Profile , Research)(1398.HK: Quote, Profile , Research) (ICBC), the world's largest financial institution at one point last year, advanced 2.6%. Sinopec, Asia's largest refiner by volume, rose 3.1%.
But Hong Kong trading reflected wider international sentiment and fell. The Hang Seng Index <.HSI> fell 307.94 points or 1.70% to 17,776.66 points. Telecoms, basic materials like Chalco, Petrochina all fell heavily. But power generators defied broad market trend and rose universally on news that Chinese regulators may increase electricity prices later in 2009. With coal prices down 50% from its peak in July 2008, outlook is good for Huaneng Power and other Chinese power generators. BNP Paribas upgraded Huaneng Power International (0902.HK: Quote, Profile , Research) (600011.SS: Quote, Profile , Research) (HNP: Quote, Profile , Research) to BUY from Hold today on strong outlook.
Looking at Chinese ADRs from a technical point of view, a dramatic change took place from last week. Only 1 ADS is overbought vs. 14 last Thursday. Also, most China sstocks are now trading well below their 20 day moving averages singalling the death of short term momentum. At least for now. But momentum comes back the fastest after big dips.