November 9, 2010 (Chinavestor) China will tighten control of foreign funds in the country, preventing a flow of hot money into China's capital markets. The State Administration of Foreign Exchange will tighten foreign debt-quotas for banks as China is preparing for the capital flee from the U.S. thanks to the $600 billion liquidity pump. Stocks in Shanghai and Hong Kong fell, financial stocks bearing most of the brunt. The Hang Seng index (INDEXHANGSENG:.HSI) fell 253.8 points or 1.0 percent while the Shanghai Composite Index (SHA:000001) shed 24.5 points or 0.8 percent.
Looking at NYSE cross-listed components of the Hang Seng Index (INDEXHANGSENG:.HSI) only a handful of them were able to eke out any gains. Yanzhou Coal (HKG:1171) (NYSE:YZC) advanced +0.4 in Hong Kong followed by HSBC Plc. (HKG:0005) while Huaneng Power International (HKG:0902) traded sideways. This concludes the good news... Now the worst decliners: CNOOC Ltd. (HKG:0883) (NYSE:CEO) fell 2.1 percent while Aluminum Corp. of China (HKG:2600) shed 1.7 percent. Index heavy weight China Mobile Ltd. (HKG:0941) (NYSE:CHL) fell 1.1 percent.
In contrast to Hong Kong, resource and metal stocks did relatively well among components of the Shanghai Composite Index (SHA:000001). Western Mining (SHA:601168) advanced 6.4 percent while Zijin Mining (SHA:601899), the largest Chinese gold miner, rose 2.3 percent as gold prices stayed firm. Jiangxi Copper (SHA:600362) and Aluminum Corp. of China (SHA:601600) were all among the best components of the Shanghai Composite Index (SHA:000001)
Index futures point to a higher opening ahead the bell this morning. If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as a proxy for ADR trading, outlook is best for Yanzhou Coal Mining (NYSE:YZC), HSBC Plc. (NYSE:HBC) and Huaneng Power International (NYSE:HNP) for these stocks managed to stay afloat despite a hostile market environment in Hong Kong earlier the day. But CNOOC ltd. (NYSE:CEO) and China Mobile (NYSE:CHL) are up for trouble at the same time.