July 23, 2010 (Chinavestor) The Shanghai Composite Index (SHA:000001) rose for the fifth day in a row, ending the day 9.6 points or 0.4 percent higher. The mainland's most liquid index advanced 179.06 points or 7.48 percent for the week, its best performance for the year, after policy makers pledged not to introduce tightening measures for the rest of the year. Stocks that advanced outnumbered those that fell eight to one. Optimism spread to Hong Kong as well, sending the Hang Seng Index (INDEXHANGSENG:.HSI) 225.6 points or 1.1 percent higher on Friday. The index gained 565.17 points or 2.79 percent for the week.
Financial, energy and property stocks led the advance in both markets. Industrial and Commercial Bank of China (601398), the world's largest financial institution, rose 1.4 percent in Shanghai while China CITIC Bank (SHA:601998) jumped 2.9 percent. China Vanke (SHE:200002), the largest publicly traded real estate developer, rose 2.6 percent for the day.
Yanzhou Coal (HKG:1171) (NYSE:YZC) advanced 2.3 percent for the day and is up over 10 percent for the week. The stock is making a V-shaped recovery following a steep dive at the end of June. China Shenhua Energy (HKG:1088), the largest Chinese coal miner, advanced 3.4 percent.
But Chinese airliners fell on Friday ending four days of steep price increase, led by China Eastern Airlines (HKG:0670) (NYSE:CEA) and Air China (HKG:0753). China's largest airline by fleet size, China Southern Airlines (HKG:1055) (NYSE:ZNH), shed 0.6 percent.
Earnings related optimism helped buoy Chinese ADRs for the week. Baidu.com (NASDAQ:BIDU) reported its best quarterly results yet on Thursday, solidifying its price above the $70 dollar range.Coverage: Baidu beats estimates.
More earnings of Chinese ADRs for the upcoming week: China stock earnings calendar July 26-31.
As far as Chinese ETFs are concerned, the Morgan Stanley China Fund (NYSE:CAF), tracking the Shanghai Composite Index (SHA:000001), run ahead of its proxy and might level off for now. The same is true for the iShares FTSE/Xinhua 25 Index (NYSE:FXI), a large cap proxy following the Hang Seng Index (INDEXHANGSENG:.HSI).
The China Real Estate ETF (NYSE:TAO) is getting overbought and might take a break, at least for the short term, according to the overbought indicator.