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Credit tightening fears weight on China shares in Asia

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decline1 March 15, 2010 (Chinavestor) A good size sell-off pushed Chinese indices lower in Asia on Monday. The Hang Seng Index (INDEXHANGSENG:.HSI) declined -130.64 points or -0.62% to 21,079.1 while the Shanghai Composite (SHA:000001) fell -36.47 or -1.21% under 3,000 to 2976.94 by the close. Investors fear that credit tightening will hurt growth and stock prices. Chinese policy makers have to find a way to exit from the stimulus and fight accelerating inflation and property investment on the same time. Banks have been ordered to set aside increasing amounts of cash to create a safety cushion should the real estate market show signs of a bubble.

The sell-off was universal in Hong Kong, stocks that fell outnumbered those that advanced 4:1 from the components of the Hang Seng Index (INDEXHANGSENG:.HSI). China Eastern Airlines (HKG:0670) was the worst performer on Monday with a -3.9% fall. Shares of Aluminum Corp. of China (HKG:2600) (NYSE:ACH) shed -2.5% while China Life Insurance (HKG:2628) (NYSE:LFC) declined -1.0% despite a strong premiums income growth in February. China Life sells more policies in February. Smaller rival Ping An Insurance (HKG:2318) fell -1.2%. But shares of Hutchinson Telecom (HKG:2332) (NYSE:HTX) advanced.

Earnings will dominate events for Chinese stocks listed on American stock exchanges on Monday. The earnings calendar is heavy for Monday and Tuesday with stocks such as China Housing & Land (NASDAQ:CHLN), American Oriental Bioengineering (NYSE:AOB), Global Source Ltd. (NASDAQ:GSOL), ChinaTechFaith Wireless (NASDAQ:CNTF) or BMP Sunstone (NASDAQ:BJGP). HQ Sustainable Maritime (NYSE:HQS) is going to report after the close today. China stock earnings calendar March 15- 19.

We noticed a significant institutional interest for China Petroleum & Chemical Corp. (NYSE:SNP). JP Morgan & Chase Corp. bought 7.812 million H-shares of the company in Hong Kong on March 10, 2010. When institutions buy, stock price follows reacting to strong money inflows.

On the news front CNOOC Ltd. (NYSE:CEO) reported to buy 50% of an Argentinian oil producer, setting off oil discoveries in Latin America. CNOOC Ltd. expands in Latin America.

pre-2010315

Chinese indices have been on a retreat as the following technical indicator suggests. The Shanghai Composite (SHA:000001) is under pressure and the rests of the Chinese ETFs or indices can't escape the pressure either. Market sentiment and earnings are going to dominate the trading day on Monday.

index-2010315

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