May 24, 2010 (Chinavestor) Hopes that the yuan will appreciate against other currencies and that the loose policy is here to stay buoyed investors in China. Hu Jintao, President of China, made such statements after meeting with Tim Geithner. Hillary Clinton and Ben Bernanke is also in China this week.
Each and every component of the SSE-50 index, tracking the 50 largest publicly traded Chinese stocks in Shanghai, advanced on Monday. The Shanghai Composite Index (SHA:000001) rose 89.9 points or +3.4% on Monday. Real estate and construction related stock led the rally, financials legged.
Investors were exuberant in Hong Kong, too. The Hang Seng Index (INDEXHANGSENG.HSI) rose 121.9 points or 0.6% to 19,667.76 by the close. Stocks that advanced outnumbered those that fell ten to one. Oversold airliners, energy, and real estate stocks outperformed.
Chinese ADRs are under pressure this morning before the bell. Index futures point to a lower open as Europe's ebbs persists. Longtop Financial (NYSE:LFT) and Yingli Green Energy (NYSE:YGE) reported before the open, with more solar stock on the agenda for the week. China stocks earnings calendar May 24-28.
Looking at Chinese ADRs from a technical point of view, the picture is bleak. There are no overbought Chinese stocks to speak of at the moment while he number of oversold China plays is on the rise. The weak reading of the relative strength index (RSI) this morning suggests more downside is possible if market sentiment remains subdued.