June 18, 2010 (Chinavestor) The late rally last night helped improve investor sentiment in Hong Kong, sending the Hang Seng Index (INDEXHANGENG:.HSI) 148.3 points or 0.7% higher to 20,286.71, but failed to make a difference on the Mainland. The city state's index rose for the ninth days in a row, the longest winning streak in four years. Yet the Shanghai Composite Index (SHA:000001) fell 47.0 points or 1.9%, the most in three weeks, to 2,513.22 by the end of the week.
HSBC Holdings Plc (HKG:0005) (NYSE:HBC), a Hang Seng Index (INDEXHANGSENG:.HSI) heavy weight, advanced 1.1 percent, after investors digested the successful Spanish bond issuance. Bank of Communications (HKG:3328), a bank that HSBC Plc. has a 20% stake in, rose 1.1 percent as well. Shares of the largest Chinese gold miner, Zijin Mining Group Co. (HKG:2899), jumped 3.2 percent as the price of the metal hit record high. Tencent Holdings Ltd. (HKG:0700), China’s largest internet company by market cap, soared 3.8 percent following news that it will link up with Cisco Systems Inc (NASDAQ:CSCO) developing services. China Mobile (HKG:0941) (NYSE:CHL), the largest mobile operator in the world, advanced 0.65% after smaller rival China Unicom (HKG:0762) reported soft operational statistics for May. Shares of China Unicom (HKG:0762) (NYSE:CHU) fell 1.94% on Friday.
Trading in Asia suggests U.S. listed shares of Aluminum Corp. of China (NYSE:ACH) and China Unicom (NYSE:CHU) will fall on the NYSE today but China Mobile (NYSE:CHL) and China Telecom (NYSE:CHA) are expected to firm up. China Life Insurance (NYSE:LFC) fell 1 percent on Thursday but is expected to make up for that loss on Friday. China Life Insurance May Premiums Income Increase 56.1% YoY.
The chart of "Technical measures of China ADRs" above testifies that short term momentum is back for China plays but 50-DMA is still behind neutral position despite significant inroads this week. Given the magnitude of the rally for the week, China stocks may pause on Friday before resuming any rally next week.
There isn't any obvious trading opportunity this morning by looking at divergence between Chinese ETFs and their underlying indices. The Shanghai Composite Index (SHA:000001) and the Morgan Stanley China Fund (NYSE:CAF) are in line on the following chart, just as is the Hang Seng Index (INDEXHANGSENG:.HSI) - iShares FTSE/Xinhuna China 25 Index (NYSE:FXI) pair. The rest of the indices, ETFs and commodities have been trading in a narrow range with no indication of future price moments.