Jan. 11, 2010 (Chinavestor) Shares of Chinese companies advanced in Hong Kong and Shanghai alike following strong exports data and new regulation allowing futures and short-selling in the Mainland's largest exchanges. Chinese export grew 17.7% compared to last year while imports showed a 55.9% increase, according to the Chinese Customs Bureau. The numbers reinforced investors' optimism that global trade is back on track, sending oil and commodity prices higher. Chinese shipping lines reacted with a sharp increase in both markets. China Shimming Development (HKG:1138) surged 10.1% followed by a similar run by China COSCO (HKG:1919), the largest dry-bulk shipping company in the world. The introduction of index futures in Shanghai prompted the surge of brokerage firms on anticipation that trading volume will increase. But longer term winners are expected to be large cap, liquid Chinese stocks, such as Petrochina (SHA:601857) (HKG:1857) and Industrial and Commercial Bank of China (SHA:601398), because index futures are expected to boost volume of liquid, large cap stocks. Aluminum Corp. of China (HKG:2600) was one of the best China play in HK on Monday with a 7.2% advance followed by a similar move of Sinopec Shanghai Petrochemical (HKG:0388) (NYSE:SHI). All told, the Hang Seng Index closed the day +114.77 points or +0.51% higher at 22,411.52 points.
Chinese ADRs are expected to do well on Monday - index futures point to a higher open. Chinese stocks have gained significant momentum already, as the following technical indicators suggest. most Chinese ADRs are trading above their 20-DMA and 18 are above their 50-DMA, a sharp increase form last week. 12 Chinese ADRs are considered overbought. These indicators suggest that expectations are running high.
Chinese shipping companies are the prime beneficiaries of the return of the global trade - as the following technical indicator suggests. See Global Shipping ETF (NYSE:SEA).
Chinese small cap stocks have been performing better in the latest rally so far , driven by strong market momentum. But as earnings roll out, expect larger cap companies to catch up.