September 15, 2010 (Chinavestor) Chinese stocks continued to trade water on Wednesday in Hong Kong but fell 1.4 percent in Shanghai after speculations spread that energy production cuts and further tightening of the property market are on the agenda of policy makers. The sell-off was broad in Shanghai, stocks that fell outnumbered those that advanced ten to one. The Shanghai Composite Index (SHA:000001) tumbled 36.0 points or 1.4 percent and had it not been for large cap stocks that pared relatively well, the fall might have been much steeper. Index heavy weight Industrial and Commercial Bank of China (SHA:601398), the largest financial institution in the world, shed 0.2 percent while Petrochina Co. (SHA:601857) (NYSE:PTR), the largest oil producer in China, slid 0.5 percent. But Jiangxi Copper (SHA:600362), the largest producer of the metal, fell for the third day in a row for the week, and China Life Insurance (SHA:601628) (NYSE:LFC), the largest life insurer in China, fell 3.5 percent.
China Southern Airlines (HKG:1055) (NYSE:ZNH) led the Hang Seng Index (INDEXHANGSENG:.HSI) on Wednesday. China's largest airliner by fleet size advanced 4.0 percent on Wednesday marking the fifth straight days of gains. Smaller rival China Eastern Airlines (HKG:0670) (NYSE:CEA) rose 0.5 percent. Telecoms were mixed; China Unicom (HKG:0762) (NYSE:CHU) fell the most among components of the Hang Seng Index (INDEXHANGSENG:.HSI). China Mobile (HKG:0941) (NYSE:CHL) was trading sideways while China Telecom (HKG:0728) (NYSE:CHA) rose 0.5 percent. Aluminum Corp. of China (HKG:2600) (NYSE:ACH), the third largest producer of the metal in the world, fell 2.1 percent.
With no corporate news today, economic data is going to dominate the trading day. Import prices for August is released at 8:30 while industrial production for the month is scheduled for 9:15. Investors are on the defence right now with index futures pointing to a lower open.
If the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as a proxy for selected Chinese ADRs, outllook is bright for China Southern Airlines (NYSE:ZNH) but expect some weakness from Alum,inum Corp. of China (NYSE:ACH) and China Unicom (NYSE:CHU). China Life (NYSE:LFC) was trading water in Hong Kong but fell in Shanghai, suggesting downside risk exceeds upside potential for the stock on Wednesday. China Mobile (NYSE:CHL) and China Easdtern Airlines (NYSE:CEA) have a positive bias but will not be able to fight the market should major indices head south.