(Sept. 14, 2009 - Chinavestor) The Hang Seng Index fell 229.22 points or 1.08% to 20,932.20 on Monday as investors took profits off the table. Chinese macro economic indicators, released on Friday, sent a welcoming message to investors and helped the Shanghai Composite to climb above 3,000 points for the first time in September.
But index futures in the U.S. point to a lower open following trade dispute between the U.S. and China, warning China ADR investors that the bias is with Hong Kong this morning not with Shanghai.
According to the following technical screen, Chinese ADRs have accumulated significant momentum over the last week, so a short term correction is highly anticipated. Stock to watch out for are: China Southern Airlines (NYSE:ZNH), Petrochina (PTR), Huaneng Power (HNP), Guangshen Rail (GSH), China Mobile (CHL) and Aluminum Corp. of China (ACH). These stocks did poorly in Hong Kong on Monday.
But China Unicom (NYSE:CHU) and China Eastern Airlines (NYSE:CEA) were strong, offering a glimpse of hope that these ADRs will stay above water on Monday.
Looking at Chinese indices and their trailing ETFs, there is not much arbitrage opportunity at this time. All EFTs are in tandem with their underlying indices.