March 23, 2010 (Chinavestor) Shares of Chinese companies fell in Shanghai as investors worry about the effects of the government's efforts to cool the economy. Even though the Shanghai Composite Index (SHA:000001) lost a relatively minor -21.45 points or -0.70% throughout the day, the sell-off was universal, stocks outnumbering those that advanced ten to one out of the fifty largest Chinese listed companies. Commodity and metal stocks led the decline; shares of Aluminum Corp. of China (SHA:601600) (NYSE:ACH) fell -2.6% while Baoshan Iron & Steel (SHA:600019), the largest steel maker in China, shed -2.2% on Tuesday. China Cosco (SHA:601919), the largest container shipping company in the world, fell -2.4%. But oil stocks weathered the storm relatively well, China Petroleum & Chemical Corp. (SHA:600028) (NYSE:SNP) and Petrochina (SHA:601857) (NYSE:PTR) closed only -0.3% lower for the day.
But Chinese telecoms did well, shares of China Telecom (HKG:0728) (NYSE:CHA) advanced +5.1% following earnings release a day earlier. China Unicom (HKG:0762) (NYSE:CHU) rose +1.7%.
Chinese stocks listed in American equity markets have taken advantage of a strong market sentiment. The number of Chinese ADRs trading above their 50-DMA is on the rise, a bullish sign. Another positive development is that the number of overbought Chinese stocks is declining while the number of oversold China stocks remains relatively small. Altogether Chinese ADRs are in a position to ride the wave should U.S. equities continue the march higher.
Most Chinese indices, the Hang Seng Index and the Shanghai Composite, are virtually unchanged from last week, suggesting the market is still looking for direction. Weakness of the global shipping ETF is apparent, stocks like China Cosco (HKG:1919) have been under pressure as their profitability fell in 2009. The rest of the ETFs, key U.S. indices and commodities have been trading in a narrow range as the following chart testifies.