May 21, 2010 (Chinavestor) With the Hong Kong Stock Exchange closed for the day, it was only Shanghai that gave some indication about the appetite for Chinese stocks in Asia on Friday. The Shanghai Composite Index (SHA:000001) bounced off Thursday lows and advanced +27.6 points or +1.1% to 2,583.52 by the close. The largest Shanghai listed real estate company, Poly Real Estate (SHA:600048), advanced +6.0%, the most in three months, as investors snapped up value stocks. Another sign that investors gained back confidence was the 4.1% advance of Huaxia Bank (SHA:600015), a financial institution that needs to replenish capital. Shares of the company fell hard on anticipation that it would be difficult on the equity markets to raise funds but fear eased helping the stock outperform the broad market. SAIC Motor Co. (SHA:600104), China's largest auto maker, rose +3.7% another sign of a regained confidence. With Europe facing the debt crisis, chances are less that China will exit fast from certain stimulus measures.
Earnings propelled China TechFaith Wireless (NASDAQ:CNTF) over 20% higher on Thursday, and value solar stocks advanced ahead of earnings - like Trina Solar (NYSE:TSL), Canadian Solar (NASDAQ:CSIQ), and Suntech Power (NYSE:STP).
Chinese ADRs fell hard for the week, most technical measures are in bear territory before the open on Friday. The number of Chinese oversold stocks is at record high as the following chart testifies. The number of Chinese ADRs trading above 20-DMA is at record lows, a clear indication that investors trimmed risk by abandoning Chinese plays. But this creates opportunity for the value buyer. Petrochina Co. Ltd. (NYSE:PTR) is one of the most oversold China ADR before the open on Friday, a true bargain stock at $100.
Investors snapped up China TechFaith Wireless (NASDAQ:CNTF) on Thursday after the company said earnings more than tripled. China TechFaith Wireless Q1 profit rises.
Trina Solar (NYSE:TSL) advanced 3.65% on Thursday ahead of earnings next week. ReneSola Ltd. (NYSE:SOL), and China Sunergy (NASDAQ:CSUN) reported better than expected solar shipments, revenues and earnings for the first quarter so far, suggesting industry leader TSL and STP will do well next week. For additional solar coverage, visit http://www.chinavestor.com/solar.html.
Index futures point to a lower open for U.S .equities, hurting the prospects of Chinese ADRs as a consequence. Each and every component of the DJIA ended in the red on Thursday and the heavy sell-off is to continue in the morning. The sell-off was universal, each and every Chinese and global economy related ETF have become oversold. The Shanghai Composite Index (SHA:000001) is the only bright spot at the moment pointing north.