Dec. 18, 2009 (Chinavestor) China stocks in Asia ended the week on a low tone following speculations that the government will crack down on sizzling property prices in certain cities and that Chinese banks are more strained after record lending then originally though. Fitch Ratings warned that Chinese banks have started to use off-balance sheet items to keep lending at record pace. Real estate developers and financial institution fell hard in Hong Kong dragging the Hang Seng Index to a three weeks low on Friday. The city's mian index fell -171.75 points or -0.80% to 21,175.88 at the close. Stocks didn't do any better in Shanghai on Friday. The Shanghai Composite Index fell -65.19 points or -2.05% to 3,113.89. Poly Real Estate (SHA:600048) fell -7.5% while Aluminum Corp. of China (SHA:601600) dived -8.4%.
But index futures point to a strong open. This will lift China ADRs with two special groups in favor: oversold China stocks and momentum China stocks are expected to outperform on Friday.
The sudden drop in the price of China Real Estate ETF (NYSE:TAO) is a reflection on the depth of the loss of sentiment but intelligent investors might take it as a opportunity to buy into weakness. The iShares FTSE/Xinhua China Index (NYSE:FXI) is oversold and is ready to bounce right off. For our stock specific information, visit China ADRs to bounce back on Friday