October 28, 2010 (Chinavestor) China stock investors turned cautious in Asia as outlook for both Shanghai and the U.S. looks uncertain. The Shanghai Composite Index (SHA:000001) shed 4.5 points or 0.1% as investors gauge the prospect of further tightening and interest rate hikes to fight inflation. The Hang Seng Index (INDEXHANGSENG:.HSI) from Hong Kong eked out a not too persuasive 46.3 points or 0.2% gain. Industrial and Commercial Bank of China (HKG:1398) reported net income growth of 27% but most of it was already incorporated in its price. CNOOC Ltd. (HKG:0883), China's off-shore oil specialist, reported a 64% increase in third quarter revenues.
But it was Guangshen Rail (HKG0525), another NYSE-HKEx cross listed blue chip, that move the most among components of the Hang Seng Index (INDEXHANGSENG:.HSI) on strong earnings. BYD Company (HKG:1211), the Chinese electric car maker backed by Warren buffet, bounced back after two days of tumbling. But airliners fell hard, led by China Southern Airlines (HKG:1055) tumbling 6.2%. The second largest Chinese carrier, China Eastern Airlines (HKG:0670) pared better but Air China (HKG:0753), China's flagship carrier, fell 4.0%. All three airliners were among the worst 5 components of the 42 member Hang Seng Index (INDEXHANGSENG:.HSI).
Trading in Shanghai was similar to Hong Kong, investors were cautious. Aluminum Corp. of China (SHA:601600) rose 5.4%, making it the best among the largest components of the Shanghai Composite Index (SHA:000001). But SAIC Motor (SHA:600104), the largest Chinese auto maker, fell 3.7% dragging down consumer stocks. Zijin Mining (SHA:601899), China's largest gold miner, succumbed to profit taking again along with Western Mining Co. (SHA:601168). Both stocks surged earlier in October prompting profit taking at the end of the month.
Strong earnings buoyed global investors setting a positive tone ahead of the open. If components of the Hang Seng index (INDEXHANGSENG:.HSI) and the Shanghai Composite Index (SHA:000001) can serve as a guidance before the NYSE open, outlook is good for Aluminum Corp. of China (NYSE:ACH) and Guangshen Rail (NYSE:GSH), but dim for China Southern Airlines (NYSE:ZNH) and China Eastern Airlines (NYSE:CEA).
On the earnings front. CNOOC Ltd. (NYSE:CEO) reported to the upside along with Petrochina Co. Ltd. (NYSE:PTR). China Telecom (NYSE:CHA), Sinopec (NYSE:SNP) and China Life Insurance (NYSE:LFC) is going to report later this week. Visit China stock earnings calendar Oct. 25-29 for details.