February 24, 2011 (Chinavestor) The Hang Seng Index (INDEXHANGSENG:.HSI) continued the free fall on Thursday, following the Dow Jones Industrial Average (INDEXDJX:.DJI) lower for the second day. But the Shanghai Composite Index (SHA:000001) shrugged off turmoil of the Middle-East and rose for the second day in a row. The sell-off was universal in Hong Kong, stocks that fell outnumbered those that advanced 20 to one among components of the 42 member Hang Seng Index (INDEXHANGSENG:.HSI). Large caps suffered the most, each and every components of the underlying index for the iShares FTSE/Xinhua 25 China Index (NYSE:FXI) fell. Airliners continued to suffer as kerosene prices spiked, Air China (HKG:0753) falling the hardest. Construction a upstream energy firms fell the hardest in Hong Kong as high oil price dented into profit margins.
But trading was different in Shanghai where investors shrugged off short term volatility and focused on upcoming earnings instead. Zijin Mining (SHA:601899), the largest Chinese gold miner, fell the most among the 50 largest components of the Shanghai Composite Index (SHA:000001), after a two day surge.
Looking at Asian trading of components of key Chinese ETFs, large cap China stocks suffered a heavy blow on Thursday. All 25 members of the iShares FTSE/Xinhua 25 China Index (NYSE:FXI) fell with China Communications Construction Co Ltd (HKG:1800) tumbling the hardest. But CNOOC Ltd. (HKG:0883), a pure off-shore oil producer, managed to shed only 0.2% as price of oil climbed above the $100 mark a barrel.
Small cap stocks experienced a less severe sell off yet stock that fell outnumbered those that advanced ten to one among components of the Guggenheim Small Cap China Fund (NYSE:HAO).
Unrest in Libya continues to hurt market sentiment for western markets, casting a shadow over Chinese ADRS on the NYSE and NASDAQ on Thursday. If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as proxy for China ADR trading, outlook is best for CNOOC Ltd. (NYSE:CEO) but airliners and petrochemicals are under pressure.