November 22, 2010 (Chinavestor) Chinese equity investors sold-off financials in Asia on Monday sending both key regional indices lower for the day. The Hang Seng Index (INDEXHANGSENG:.HSI) fell 81.7 points or 0.3% while the Shanghai Composite Index (SHA:000001) shed 4.2 points or 0.1%. Financials and real estate stock led the decline in Shanghai where investors continued to digest the effects of the increase of bank deposit ratio by 50 bps. But the decline was universal among large caps, stock that fell outnumbered those that advanced 10 to 1. Profit taking dominated in Hong Kong where investors took merit from Ireland's bailout yet kept an eye on the mainland for economic news.
Key ADRs with the biggest upside potential for Monday include China Petroleum & Chemical Corp. (NYSE:SNP), Aluminum Corp. of China (NYSE:ACH). China Life Insurance (NYSE:LFC) and China Mobile (NYSE:CHL). But smaller mobile operator China Unicom (NYSE:CHU) and China Eastern Airlines (NYSE:CEA) have substantial downside risk.
Looking at components of the Hang Seng Index (INDEXHANGSENG:.HSI), Ping An Insurance (HKG:2318) gave back 1.0% after last week's 3.5% advance. Another stock succumbing to profit taking after last week's sound performance was Weiqiao Textile (HKG:2698) that fell the most among components of the 42 member Hang Seng Index (INDEXHANGSENG:.HSI) on Monday. But index heavy weight China Mobile (HKG:0941) advanced 1.2% just like China Life Insurance (HKG:2628), another NYSE cross listed blue chip. Resource and energy stocks rose on the stronger Euro as Ireland's bail out played out. Aluminum Corp. of China (HKG:2600) advanced 1.3% in Hong Kong while China Petroleum & Chemical Corp. (HKG:0386) rose 1.4%.
The dip continued in Shanghai where investors punished financial stocks the most. Huaxia Bank (SHA:600015) fell the most among the 50 largest components of the Shanghai Compoite Index (SHA:000001) where four out of the five largest decliners came from the financial sector.
Key components of Chinese ETFs were relatively muted on Monday except for Yizheng Chemical (HKG:1033) that jumped over 10%. But most components of the iShares FTSE/Xinhua 25 Index (NYSE:FXI) were less volatile ranging from 1.9% to negative -1.8% on Monday. Downside for components of the Guggenheim China Small cap ETF (NYSE:HAO) was capped as earnings season is coming to an end.
If components of the Shanghai Composite Index (SHA:000001) and the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as proxyt for ADR trading, outlook is best for China Petroleum & Chemical Corp. (NYSE:SNP), Asia's largest refiner. Weaker dollar helped commodity prices besides energy, boosting outlook for Aluminum Corp. of China (NYSE:ACH). Last week's weak performer China Life Insurance (NYSE:LFC) and unappreciated China Mobile (NYSE:CHL) looks good ahead the bell as well. But China Unicom (NYSE:CHU) is weak on sluggish subscriber growth while China Eastern Airlines (NYSE:CEA) continues to suffer.