Chinese stocks continued to advance in Shanghai and Hong Kong on Wednesday simultaneously as investor optimism collided with analyst upgrades. The Shanghai Composite Index <.SSEC> rose 43.39 points or 1.38% to 3,188.55, a new record for 2009. The Hang Seng Index <.HSI> in Hong Kong advanced 372.93 points or 2.09% to 18,258.66. Rally was universal in both markets, shipping and iron stocks talking the lead.
Looking at the U.S. listed China stock list, all indicators point to a higher open unlocking additional upside potential. With only three China ADRs overbought, Chinese stocks are set to rally. We highlighted PetroChina (PTR) and Suntech Power Holdings Co. Ltd. (STP) in the oversold report that these stocks are set to bounce back strongly. The relative strength indicator for Chinese ADRs is neutral, telling investors that the best is yet to come.