December 20, 2010 (Chinavestor) Chinese stocks declined in Asia on Monday as tension on the Korean peninsula heightened. The Hang Seng Index (INDEXHANGSAENG:.HSI) fell 75.8 points or 0.3% while the Shanghai Composite Index (SHA:000001) tumbled 40.8 points or 1.4%. Chinese companies on the move included Petrochina Co. Ltd. (NYSE:PTR) and Yanzhou Coal (NYSE:YZC) from the energy sector and China Eastern Airlines (NYSE:CEA) from the transportation sector. China Mobile (NYSE:CHL), the largest mobile carrier in the world, and China Unicom (NYSE:CHU) moved higher as well. The decline was universal in Shanghai, stocks that fell outnumbered those that advanced ten to one among the 50 largest components of the Shanghai Composite Index (SHA:000001). Large cap Petrochina Co. Ltd. (SHA:601857) and China Life Insurance (SHA601628) fell over 2% but Industrial and Commercial Bank of China (SHA:601398) shed 0.7% only.
But Hang Seng Index (INDEXHANGSENG:.HSI) component Petrochina Co. Ltd. (HKG:0857) advanced 1.24% in Hong Kong along with Yanzhou Coal Mining (HKG:1171). China Unicom (HKG:0762), the second largest Chinese mobile carrier, advanced 1.7%, the second most among 42 components of the Hang Seng Index (INDEXHANGSENG:.HSI). But airliners fell hard again led by a 4.0% decline by China Eastern Airlines (HKG:0670). China's largest domestic airline, China Southern Airlines (HKG:1055) fell 3.6% fro the day.
Looking at key ETFs, half of the components of the 25 member iShares FTSE/Xinhua 25 China Index (NYSE:FXI) advanced while half other them fell on Monday. China Unicom (HKG:0762) and China Mobile (HKG:0941) made it to the best five components of the index, suggesting telecoms benefited from a sector rotation. But outlook for major indices remain in the shambles as insurance companies fell - both in Hong Kong and Shanghai. Investors have to remember that insurance companies derive a significant part of their net income from investment related activities, something that turns sour when equity markets under-perform.
If components of the Shanghai Composite Index (SHA:000001) and the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as proxy for ADR trading, outlook is best for China Unicom (NYSE:CHU) and China Mobile (NYSE:CHL) for the day. Oil major Petrochina Co. Ltd. (NYSE:PTR) was mixed in Asia but has a sound positive bias thanks for a sizable rally in Hong Kong. Yanzhou Coal Mining Co. (NYSE:YZC) is looking good ahead the bell as well.
But Chinese iarliners fell hard in Asia, suggesting China Eastern Airlines (NYSE:CEA) and larger rival China Southern Airlines (NYSE:ZNH) will be under pressure right at the open.