(Sept. 18, 2009 - Chinavestor) The Shanghai Composite Index (SHA:000001) fell 3.2% on Friday for no apparent reason. Financials took a hit following rumors that CEO of BOC Hong Kong Holdings sold 600,000 shares. Industrial and Commercial Bank of China (SHA:601398) fell 2.1% but smaller lenders suffered more. Bank of China, Bank of Communications, China Merchants Bank and China Construction Bank (SHA:601939) all fell over 2.5%.
Hong Kong trading was mute as well as investors took profits off the table. The Hang Seng Index fell 145.06 points or 0.67% to 21,623.45 but is still 456 points ahead of last week's close.
China ADRs have sustainable momentum but volatility is coming back as some NASDAQ listed China ADRs are heavily overbought. Small cap stocks are chased by hot money, on top of the overall situation. UTI Starcom is a stock that keeps popping up for no reason. But as the oversold indicator this morning suggests, China Mobile (NYSE:CHL) is oversold, a situation value investors should not pass on.
Looking at Chinese ETFs this morning, the Morgan Stanley China (NYSE:CAF) is in danger following a drop in Shanghai. But the HAO and PGJ ETFs look safe while the FXI is subject to a small correction.