April 30, 2010 (Chinavestor) China shares soared in Hong Kong but continued to drag in Shanghai on the last day of trading for the month. The Hang Seng Index (INDEXHANGSENG:.HSI) advanced +329.7 points or +1.6% to 21,108.59 by the close. The rally was universal, stocks that advanced outperformed those that fell twenty to one. ZTE (HKG:0763), the largest Chinese telecom equipment maker, fell -1.5% following news that the Indian government banned telcos to buy Chinese products based on national security concerns. But airliners, energy and bank stocks soared. Industrial and Commercial Bank of China (SHA:601398) rose 1.1% while China Construction Bank (SHA:601939) advanced +0.96% as Chinese banks reported the largest first quarter profits among financial institutions in the world.
Investors on the mainland remained bearish as the government's efforts to cool off the property market is unwinding. Shares of Baoshan Iron & Steel (SHA:600019), the largest Chinese listed steel maker, rose +6.0% after the company reported first half profits jumped over ten fold! But the Shanghai Composite Index (SHA:000001) barely made it to the black by the end of the day and still lost -3.8% for the week or -8.24% for the month.
Strong earnings, positive economic outlook sent the DJIA up +122.0 points or 1.1% on Thursday. All but three components of the 30 member index advanced. Investor optimism is still present, index futures point to a higher open before the bell on Friday. Closely watched first quarter GDP data is going to be released today, many expect a strong reading.
Chinese ADRs are expected to go with the flow - or market sentiment in the U.S. There is room for improvement, as the following technical measured of ADRs testifies.
The Shanghai Composite Index (SHA:000001) remains oversold, according to the chart below. The rest of Chinese and U.S. indices, including the Hang Seng Index (INDEXHANGSENG:.HSI), have been trading in a much narrower range. Key ETFs: Global Shipping ETF (NYSE:SEA) is expected to turn around if strong U.S. GDP numbers send markets to head north. Oil is expected to rise on strong economic demand as well. Both ETFs are far from overbought and have room for improvement.