Dec. 21, 2009 (Chinavestor) Shares of Chinese companies fell in Hong Kong for the fifth day in a row as investors locked in 2009 gains. The Hang Seng Composite Index fell -227.78points or -1.08% to 20,948.10 at the close. China Southern Airlines (HKG:1055) (NYSE:ZNH) fell 4.5% followed by China Life Insurance (HKG:2628) (NYSE:LFC).
But trading in Shanghai cheered investors on the back of strong economic data. China is on track to achieve an 8% GDP growth in 2009 and the government set the same target for 2010. But China is likely to shoot over as it did since 2005 despite a modest official target. Real estate companies bounced back off strongly in Shanghai just as did oversold Aluminum Corp. of China (SHA:601600). Consumer staples outperformed but financials weighted on the Shanghai Composite. The index ended up going 90.9 points or 0.29% higher to 3,122.97 points at the close.
Index futures point to a higher open for the American equity markets. Investors sentiment is back on strong on economic optimism. According to estimates fourth quarter economic growth accelerated to an 3.9% annualized rate, the best quarterly reading since 2006 Q1. Positive market sentiment is expected to carry China ADRs higher for the day. Watch out for momentum stocks and expect oversold China plays to come back off strong on Monday.
According to the overbought indicator, the China real estate ETF (NYSE:TAO) is way oversold and a rebound is highly likely. The iShares FTSE/Xinhua 25 index and the Morgan Stanley China Fund (NYSE:CAF) are oversold and ready to bounce back off on Monday.