December 14, 2010 (Chinavestor) The Shanghai Composite Index (SHA:000001) eked out a 0.1% gain on Tuesday after a 2.8% surge a day before while the Hang Seng Index (INDEXHANGSENG:.HSI) rose 113.6 points or 0.5%. The rally was universal in Hong Kong; stocks that advanced outnumbered those that fell four to one. Outlook for ADRs is mixed based on Hong Kong trading. Airliners broke a five day loosing streak while China Unicom (NYSE:CHU) continued to shine. China Southern Airlines (NYSE:ZNH) rose 2.8% followed by China Eastern Airlines (NYSE:CEA). But power generators fell as price of coal advanced, hurting Huaneng Power International (NYSE:HNP).
Investors turned cautiously optimistic in Hong Kong ahead of the annual trade and economic talks between the U.S. and China. Rising coal and steel prices helped China Shenhua Energy (HKG:1088), China's largest coal miner, to surge 3.8% along with Angang Steel (HKG:0347). Maanshan Iron & Steel (HKG:0323) rose 3.1%. But outlook for power generators worsened as arctic cold gipped northern China, sending coal prices higher. Dantang Power (HKG:0991), Huaneng Power (HKG:0902) and Huadian Power (HKG:1071) all fell hard among components of the Hang Seng Index (INDEXHANGSENG:.HSI).
Outlook for large cap China stocks is good for today, based on the performance of components of the iShares FTSE/Xinhua 25 China Index (NYSE:FXI) in Asia this morning. stocks that advanced outnumbered those that fell three to one among the 25 components of the index.
If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as a proxy for ADR trading, outlook is best for China Southern Airlines (NYSE:ZNH) and China Unicom (NYSE:CHU) ahead the NYSE open. China Eastern Airlines (NYSE:CEA)and China Telecom (NYSE:CHA) had a strong showing in Asia as well, but Huaneng Power International (NYSE:HNP) is expected to gap way down on Tuesday.