October 15, 2010 (Chinavestor) The Shanghai Composite Index (SHA:000001) surged on Friday, capping its best week in 2010 with a 91.5 points or 3.1% advance. Selected mining and resource plays continued to gain but some prominent names of the sector succumbed to profit taking. But financials stepped up as foreign fund flows poured into China's equity markets. Industrial and Commercial Bank of China (SHA:601398), the largest financial institution in the world, jumped 6.6% along with Bank of Communications (SHA:601328).
Trading in Hong Kong was different as is evidenced by the dismal performance of the Hang Seng Index (INDEXHANGSENG:.HSI) this morning. The main gauge of the city's exchange fell 94.5 points or 0.4 percent as the DJIA faltered on disappointing economic news. But better than expected earnings from the U.S. tech sector helped Tencent Holdings (HKG:0700), one of the most prominent Chinese web-portals. The same news is likely to help Chinese internet stocks in the U.S. such as Baidu.com (NASDAQ:BIDU) and NetEase.com Inc. (NASDAQ:NTES).
Ping An Insurance (HKG:2318) was the worst performing component of the 42 member Hang Seng Index (INDEXHANGSENG:.HSI) with a 4.2% fall but larger rival China Life Insurance (NYSE:LFC) (HKG:2628) managed to eke out a 0.6% gain. Zijin Mining Co. (HKG:2899), the largest Chinese gold miner, and Jinagxi Copper (HKG:0358), the largest Chinese producer of the metal, succumbed to profit taking. CNOOC Ltd (NYSE:CEO) (HKG:0883), China's offshore oil specialist, fell 1.9% along with key energy plays. China Shenhua Energy (HKG:1088), China's largest coal miner, tumbled 1.7%.
Index futures fluctuate ahead the opening bell on Friday, waiting for FED Chairman Ben Bernakne's keynote speach along with important economic news. Earnings from Google Inc. (NASDAQ:GOOG) blew past expectations and sent the tech sector soaring after market.
If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can be used as a proxy for China ADR trading, outlook is dim for CNOOC Ltd. (NYSE:CEO) and for Chinese telecoms. But H-shares of China Southern Airlines (NYSE:ZNH) (HKG:1055) and China Eastern Airlines (NYSE:CEA) (HKG:0670) advanced 6.3% and 1.8%, respectively suggesting airlines will take a different course on Friday. Baidu.com (NASDAQ:BIDU) is up pre-market on Google's back and will help lift the rest of the internet sector. Sina Corp. (NASDAQ:SINA), Sohu.com (NASDAQ:SOHU) and NetEase.com (NASDAQ:NTES) are most likely to benefit.