February 14, 2011 (Chinavestor) Chinese investors snapped up assets at bargain prices in Hong Kong and Shanghai on Monday following a better than expected export data and as tensions in Egypt eased. Exports outstripped imports by only $5.3 billion in January, a significant improvement from last year, as rising commodity prices and increasing consumption in China helped shrink the trade balance. The solid demand in China lifted investor sentiment, sending the Shanghai Composite Index (SHA:000001) 71.6 points or 2.5% higher for the day. The rally was universal, all but one component of the 50 largest listed stocks advanced. The Hang Seng Index (INDEXHANGSENG:.HSI) surged 292.1 points or 1.3% with all 24 components of the index on the rise. This is the first such universal rally for over 5 months. The Xinhua 25 index, the underlying index for the most liquid Chinese ETF, the iShares FTSE/Xinhua 25 China Index (NYSE:FXI), rallied with all 25 components ending the day in the black.
Stocks with the largest decline from last week made a sound comeback on Monday. Sinopec Shanghai Petrochemical (NYSE:SHI) fell 4.08% last week but advanced 6.8% this morning in Hong Kong. China Eastern Airlines (NYSE:CEA), the second largest Chinese airline, advanced 5.6% in Hong Kong after a 4.3% decline last week. China Southern Airline (NYSE:ZNH), the largest Chinese airline by fleet size, jumped 6.5% in Hong Kong, in line with Air China (HKG:0753), China's flagship carrier.
Investors on the Mainland were even more enthusiastic following the export data. Finance, resourceinsatiable appetite for copper and other construction related metals. All but one of the 50 largest listed components of the Shanghai Composite Index (SHA:000001) rose. China South Locomotive (SHA:601766) fell following news that Railway Minister, Liu Zhijun, was ousted following allegations that he took bribes from various companies.
stocks advanced the most as China continues to have an
Looking at Asian trading of components of Chinese ETFs, outlook is bright for the iSharesXinhua 25 China ETF (NYSE:FXI). All of the components of its underlying index advanced in Asia on Monday, suggesting the ETF has nowhere to go than higher on the NYSE today. The rally was somewhat less universal among smaller Chinese stocks though the 10:1 ratio for stocks that advanced is very convincing. This bodes well for the Guggenheim Small Cap China ETF (NYSE:HAO). FTSE/
Outlook for Chinese ADRs is good before the opening bell on Monday thanks to the surge of Chinese shares in Asia. Ctrip.com International (NASDAQ:CTRP) reported fourth quarter earnigns before the bell. While net profit surged 59% for the quarter, shares of the company fell following a conservative outlook.
While the internet sector may take a hit following Ctrip's earnings, Chinese airliners and petrochemicals are expected to gap up big on Monday. China Eastern Airlines (NYSE:CEA) and China Southern Airlines (NYSE:ZNH) are looking very good, if components of the Hang Seng Index (INDXHANGSENG:.HSI) can serve as proxy before ADR trading. Sinopec Shanghai Petrochemical (NYSE:SHI) is just as good as price of oil fell to 10 weeks lows, helping to improve margins for China's largest ethylene maker.