January 7, 2010 (Chinavestor) Chinese stocks ended the first week of 2011 higher albeit the rally lost steam by the end of the week. The Shanghai Composite Index (SHA:000001) advanced 14.6 points or 0.5% on Friday but the Hang Seng Index (INDEXHANGSAENG:.HSI) fell 99.7 points or 0.4% for the day. Investors in Hong Kong were looking for U.S. jobs data and locked in profits on Friday.
Metal stocks fell on a stronger dollar in Asia. Jiangxi Copper (SHA:600362) (HKG:0358), China's largest producer of the metal, fell the most among components of the Hang Seng Index (INDEXHANGSENG:.HSI). Jinduicheng Molybdenum (SHA:601958), another precious metal company, fell the second most among the 50 largest components of the Shanghai Composite Index (SHA:000001). But financials rose in Shanghai as most of the bad news are already incorporated in the stock price - investors argued.
Most large cap stocks fell in Hong Kong, as components of the iShares FTSE/Xinhua 25 China Index (NYSE:FXI) testify. Stock that fell outnumbered those that advanced five to one among the 25 members of the Xinhua 25 Index. But small caps were mixed with no negative bias in Asia this morning.
Volatility is back for Chinese ADRs for the week as some components of the China ADR universe moved double digits. China Green Agriculture (NYSE:CGA) is under pressure following allegations of financial wrongdoings while Qiao Xing Universal Resource (NASDAQ:XING) fell 7.8% after a sizable rally earlier the week.
If components of the Shanghai Composite Index (SHA:000001) or the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as proxy for ADR trading, outlook is weak for large cap stock such as CNOOC Ltd. (NYSE:CEO) or China Telecom (NYSE:CHA). But China Life Insurance (NYSE:CHL) advanced in Hong Kong and Shanghai on Friday suggesting a possible gap up is to follow on the NYSE on Friday.