April 15, 2010 (Chinavestor) Chinese investor shrugged off strong U.S. economic news and were occupied by a slew of Chinese economic data. GDP growth have accelerated to +11.9% in the first quarter of 2010, the fastest in three years, suggesting that an interest rate hike is inevitable. The dollar-Yuan peg is an additional uncertainty that made investors staying on the sidelines. Energy stocks outperformed in Shanghai while real estate and resource-construction material stocks were sluggish. The Shanghai Composite Index (SHA:000001) fell -1.22 points or -0.04% to 3,164.97 at the close.
Trading in Hong Kong was different on Thursday. The Hang Seng Index (INDEXHANGSENG:.HSI) was in the positive territory for most of the day but succumbed to Chinese fiscal tightening worries by the end of the day. Airliners rose on the possibility of the Yuan appreciation and energy stocks advanced on positive global economic outlook.
Chinese ADRs have enjoyed a universal rally in the past two weeks. The number of Chinese stocks trading above 20-DMA and 50-DMA has been on the rise for over three weeks by now. The good news is that more upside is possible, according to technical indicators. The relative strength indicator is still below 60, just as is the overall technical strength index - see bottom of the next chart. .
When it comes to major indices and indicators, the good news is that none of them below are trading at extremes. This is turn suggests current rally is sustainable - should earnings and other economic data support it.