September 17, 2010 (Chinavestor) Hong Kong listed China stocks soared on U.S. optimism but Shanghai listings fell on Friday, capping the largest weekly loss for the Shanghai Composite Index (SHA:000001) since July. The Hang Seng Index (INDEXHANGSENG:.HSI) advanced 279.4 points or 1.3 percent for the day while the H-share index, measuring the performance of Chinese stocks listed in Hong Kong, rose 1.4 percent.
Chinese airliners fell on both Asian exchanges; China Eastern Airlines (HKG:0670) tumbled 1.8 percent in Hong Kong while China Southern Airlines (SHA:601766) (HKG:1055) fell 1.6 percent in Shanghai and 1.5 percent in Hong Kong. Beijing Airport (HKG:0694), another Hang Seng Index (INDEXHANGSENG:.HSI) component, fell 0.5 percent. Chinese power companies continued to rally on tariff increase; Huaneng Power International (HKG:0902), the largest independent power producer, rose 4.8 percent on Friday. Aluminum Corp. of China (HKG:2600) and China Telecom (HKG:0728) shined as well.
BYD Company Limited (HKG:1211), maker of rechargeable batteries and electric cars, jumped 10.7 percent with heavy volume, as investors snapped up rare metals and products related stocks. China, responsible for 70 percent of rare metals trading, slashed export quotas by half earlier this year, ensuring supply for domestic consumption. Yet investors fear a shortage of rare metals will push commodity prices higher, prompting a broad rush for mining stocks. Jinduicheng Molybdenum (SHA:601958) was the best performing component of the Shanghai Composite Index (SHA:000001) on Friday, followed by Western Mining (SHA:601168) and Zijin Mining (SHA:601899), China's largest gold miner. Jiangxi Copper (SHA:600362), the largest Chinese producer of the metal, rose 1.7 percent on Friday trimming losses for the week.
Traders in Shanghai were consumed by fears that the government will tighten fiscal policy and lending, sending financial and construction related stocks falling for the week. Agricultural Bank of China (SHA:601288), responsible for the largest IPO in 2010, fell below its IPO price for the first time during the week, while Industrial and Commercial Bank of China (SHA:601398), the largest financial institution in the world, fell for the fourth day in a row. The stock is off 2.7 percent for the week.
Strong profits from Oracle and RIMM sent index futures higher ahead the opening bell on Friday. If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as a proxy for Chinese ADRs, outlook is dim for China Eastern Airlines (NYSE:CEA) and China Southern Airlines (NYSE:ZNH), but Huaneng Power (NYSE:HNP), China Telecom (NYSE:CHA), Aluminum Corp. of China (NYSE:ACH) and Sinopec (NYSD:SNP) are looking good.