January 4, 2011 (Chinavestor) Chinese stocks extended the rally to the second day of the new year in both key Asian markets. The Shanghai Composite Index (SHA:000001) surged 44.6 points or 1.6% while the Hang Seng Index (INDECHANGSENG:.HSI) rose 232.4 points or 1.0%. Property, railway and resource stocks surged in Shanghai following news that China may delay a property tax and that the Beijing-Shanghai high speed rail will go operational in June 2011, 7 months ahead of the schedule. NYSE-HKEX cross-listed stocks on the move in Hong Kong included Aluminum Corp. of China (NYSE:ACH), Yanzhou Coal Mining (NYSE:YZC) and China Eastern Airlines (NYSE:CEA).The rally was universal on the Mainland; stocks that advanced outnumbered those that fell 25 to 1 among the 50 largest components of the Shanghai Composite Index (SHA:000001). The rally was broad among components of the Hang Seng Index (INDEXHANGSENG:.HSI) as well.
Looking at components of key Chinese ETF in Asia this morning, outlook is sound for the iShares FTSE/Xinhua 25 China Index (NYSE:FXI) for 20 out of its 25 components rose in Hong Kong. Chinese coal shares have been on the rise on strong demand. Small caps enjoyed a universal rally of their own. 140 out of 162 components of the Guggenheim Small Cap China Fund (NYSE:HAO) rose in Asia this morning.
Index futures point to a higher open for the NYSE this morning. Considering the broad rally for both large and small cap stocks, outlook is sound for Chinese ADRs. If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as proxy for ADR trading outlook is best for Aluminum Corp. of China (NYSE:ACH) and Yanzhou Coal Mining Co. (NYSE:YZC). Airliners, China Eastern Airlines (NYSE:CEA) and China Southern Airlines (NYSE:ZNH), are looking good as well.