November 17, 2010 (Chinavestor) Asian investors sold-off Chinese shares in Hong Kong and Shanghai amid fears of Ireland's bailout costs and China's monetary tightening. The Hang Seng Index (INDEXHANGSENG:.HSI) fell 478.6 points or 2.1% while the Shanghai Composite Index (SHA:000001) skid 55.7 points or 2.0%. Both indices are off over 4% fro the week so far.
Key stocks of the day included China Eastern Airlines (NYSE:CEA) and China Southern Airlines (NYSE:ZNH) from the airline sector. Integrated oil company Petrochina Co. Ltd. (NYSE:PTR) fell hard in both Asian markets along with pure oil producer CNOOC Ltd. (NYSE:CEO). China's third largest coal miner Yanzhou Coal (NYSE:YZC) tumbled in Asia along the rest of the sector. But telecoms weathered the storm well, China Unicom (NYSE:CHU) and larger rival China Mobile (NYSE:CHL) came out relatively unscathed. China Life Insurance (NYSE:LFC) is another sound stock for the day.
Resource, metal, energy and airline stocks led the decline among components of the 42 member Hang Seng Index (INDEXHANGSENG:.HSI). The Euro fell to a four months low against the dollar hurting commodity and energy prices. Oil fell to $81.5 a barrel in Asia this morning from $88.5 just four days ago. Petrochina Co. Ltd. (HKG:0857) fell 3.25% for the day but is off over 7% for the week. CNOOC Ltd. (HKG:0883), China's offshore oil producer, skid 2.6% on Wednesday and is off 5.5% for the week. Chinese airliners fell all over the board in Hong Kong today as a stronger dollar means more debt service for dollar denominated liability such as Boeing airplanes. China Eastern Airlines (HKG:0670), the second largest Chinese carrier, tumbled 6.48% for the day while larger rival China Southern Airlines (HKG:1055) fell 4.5%. Air China (HKG:0753), the country's flagship carrier, slipped 3.6%.
Coal stocks fell along oil producers as price of coal is tied to that of oil. Yanzhou Coal Mining (HKG:1171) tumbled 5.3% while China Shenua Energy (HKG:1088), the largest coal producer in China, fell 4.1%. Both stocks are members of the Hang Seng Index (INDEXHANGSENG:.HSI).
But telecoms and insurance companies provided some solace as domestic industries are deemed less vulnerable to currency fluctuations. China Unicom (HKG:0762) shed a mere 0.2% while China Mobile (HKG:0941) skid 0.6%. Insurance companies did well, too. Ping An Insurance (HKG:2318), the second largest insurer in China, was the only component of the Hang Seng Index (INDEXHANGSENG:.HSI) that actually advanced on Wednesday. Larger rival China Life Insurance (NYSE:LFC) shed a mere 0.6%
Looking at components of key Chinese ETFs in Asia this morning, one thing is for sure: the sell-off was universal for both small and large caps. Only two components of the 160 member Guggenheim Small Cap China ETF (NYSE:HAO) advanced. The iShares FTSE/Xinhua 25 Index (NYSE:FXI), a large cap proxy, was not much better off either. Only two components of the 25 member index advanced, BOC Hong Kong Holdings (HKG:2388) and Ping An Insurance (HKG:2318). But resource, mining, coal and airliners fell hard as the following chart testifies.
If components of the Shanghai Composite Index (SHA:000001) or the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as a proxy for ADR trading, outlook is definitely dim for airliners. China Eastern Airlines (NYSE:CEA) is expected to open lower than China Southern Airlines (NYSE:ZNH). Coal miner Yanzhou Coal (NYSE:YZC) and oil producer Petrochina Co. Ltd. (NYSE:PTR) and CNOOC Ltd. (NYSE:CEO) are going to feel the pinch from a stronger dollar. China Life Insurance (NYSE:LFC) and China Unicom (NYSE:CHU) are looking good before the open with some positive bias for China Mobile (NYSE:CHL) as well.