February 2, 2011 (Chinavestor) Chinese stocks ended Wednesday on a high note ahead of the Chinese New Year. The Shanghai Composite Index (SHA:000001) advanced 8.7 points or 0.3% while the Hang Seng Index (INDEXHANGSENG:.HSI) surged 426.0 points or 1.8%. Wen Jiabao, China's Premier, said that additional measures are needed in the real estate sector to curb home prices, prompting a sell-off of real estate and construction material related stocks. But investors in Hong Kong shrugged off China specific news for the day and focused on record earnings instead.
The rally was universal in Hong Kong as all but two components of the 42 member Hang Seng Index (INDEXHANGSENG:.HSI) advanced. Oversold airliners bounced back up while Yanzhou Coal (HKG:1171) (NYSE:YZC) and Sinopec (HKG:0386) (NYSE:SNP) continued to advance from the energy sector. Aluminum Corp. of China (HKG:2600) (NYSE:ACH) advanced strongly in both Asian markets as well. The Chinese telecom sector was lacking momentum after a sound run in January.
Looking at components of key Chinese ETFs in Asia on Wednesday morning, large caps had a spectacular day. ASll but one component - China telecom (NYSE:CHA) of the 25 member iShares FTSE/Xinhua 25 China Index (NYSE:FXI) advanced ahead the Chinese New Years holidays. Small cap stocks moved higher by large as well, as components of the Guggenheim Small Cap China Fund (NYSE:HAO) testify.