October 11, 2010 (Chinavestor) Chinese investors continued to snap up shares in Shanghai, sending the Shanghai Composite Index (SHA:000001) up 2.4 percent on Monday on top of a 3.1 percent jump last Friday. This marks the best two day gain for the index for the year. The rally was universal, stocks that advanced outnumbered those that fell twenty five to one. Traders in Hong Kong found support in solid Chinese economic fundamentals combined with hopes that the FED easing will give boost to U.S. equities as well. The Hang Seng Index (INDEXHANGSENG:.HSI) jumped 263.1 points or 1.1 percent on Monday. Energy and power companies led the rally, Yanzhou Coal Mining (HKG:1171), the third largest Chinese coal producer, rose 5.6 percent followed by CNOOC Ltd. (HKG:0883), China's offshore oil specialist. Hong Kong listed H-shares of Aluminum Corp. of China (NYSE:ACH) (HKG:2600) and Petrochina Co. Ltd. (NYSE:PTR), the largest Chinese oil producer, rose 4.3% and 3.6%, respectively.
If the rally in Hong Kong was impressive, investors have to consider this: four of the 50 largest Shanghai listed companies rose to the maximum 10 percent limit. Expectations that the FED will stimulate the economy helped commodity stocks while domestic Chinese companies rose on anticipation of a stronger yuan. Chinese airliners, energy and commodity stocks all rose sharply. The result: the Shanghai Composite Index (SHA:000001) cleared the 2,800 mark at ease.
Index futures point to a slightly higher open as the DJIA broke thought the 11,000 mark last Friday. If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as a proxy for Chinese ADR trading, outlook is bright for large cap Petrochina Co. Ltd. (NYSE:PTR) and Yanzhou Coal Mining (NYSE:YZC) from the energy sector. But Aluminum Corp. of China (NYSE:ACH) is looking almost as strong as its peers.
As far as Shanghai is concerned, China Life Insurance Co. (NYSE:LFC) was the best performing componetn of the Shanghai Composite Index (SHA:000001) on Monday with a 4.5 percent rally.