Feb. 11, 2010 (Chinavestor) Shares of Chinese companies lifted the Hang Seng Index +368.47 points or +1.85% to pass the 20,000 level for the first time in five days. The H-share index, measuring the performance of Hong Kong listed China based companies called H-shares, jumped +2.09% outperforming the wider index. Strong economic data spurred investors optimism in Hong Kong on Thursday. Banks extended record credit in January and property prices rose the fastest in 21 month, but overall inflation remained low. This suggests the Central Bank of China will refrain from immediate interest rate hike, an excellent catalyst to the markets. China's economy looks healthy with an export and import surge in January coupled with record number of cars sold the same month - while inflation stayed at bay.
Mainland investors digested macro data and started to buy into oversold sectors such as steel makers, real estate and construction. The Shanghai Composite Index advanced +3.00 points or +0.1% to 2,985.50 at the close.
Index futures swung to a positive territory after jobs data came out better-then-expected. EU has proposed a bail out plan for Greece, suggesting the end of the crisis in nearing to an end. This suggests a strong market day lays ahead, and if so, then expect volatile China stocks to do well on Thursday. For a stock specific breakdown, read today's overbought/oversold report: Baidu to lift Chinese internet stocks.
Stocks have started a recovery, as the following chart testifies. Small cap stocks still lag behind larger caps - evidenced by the deviation of the iShares FTSE/Xinhua 25 Index (NYSE:FXI) and the China Small Cap ETF (NYSE:HAO). Global shipping ETF has room to go, just as is the Chinese real estate ETF (NYSE:TAO) poised to swing back strongly.