(Oct. 22, 2009 - Chinavestor) China stocks fell in Asia on Thursday on credit tightening and global economic growth concern. According to the latest statistics, China's third quarter GDP expended 8.9% YoY, the fastest pace in 2009. The Central Bank and policy makers have started signalling the end of the stimulus package and tightening monetary policy to come, in response. Wen Jiabao, China's Premier, made a quick comment on inflationary pressure, foreshadowing a tighter monetary policy to come.
This sent chills through the spine of Chinese investors, wondering whether the economy will make a smooth transition from stimulus enhanced growth to private investment related one. The Shanghai Composite Index fell -19.18 points or -0.62% to 3,051.41 at the close. China Construction Bank, the second largest Chinese lender, fell 1.5% followed Datang Power on weak earnings. Jiangxi Copper continued the slide following a 46% drop in Q3 net.
Hong Kong trading reflected on weak American market sentiment. The Hang Seng Index declined -107.59 points or -0.48% to 22,210.52 at the close. Chinese telecoms fell led by China Unicom (HKG:0762) and China Telecom (HKG:0728). China Mobile (HKG:0941) pared better by falling only one third of her smaller rivals. While Datang Power (HKG:0991) declined in Hong Kong, Huaneng Power (HKG:0902) (NYSE:HNP) managed to stay in the black following Tuesday's big jump. Yanzhou Coal (HKG:1171) (NYSE:YZC) and CNOOC ltd. (HKG:0883) (NYSE:CEO) outperformed in Hong Kong, suggesting a strong market day for their NYSE listing.
Chinese ADRs are expectedto follow overall market sentiment. With earnings season at its best, expect market volatility to remain. Today's big names include Amazon, American Express, AT&T and Merck.
Thanks to the strong real estate market in China, the China Real Estate ETF (NYSE:TAO) has been showing resilience for market swings but is now vulnerable to Chinese economic jitters. Expect the FXI, CAF and other China ETFs to reflect on overall market sentiment.