March 1, 2011 (Chinavestor) Chinese stocks took clues from the rally of the Dow on Tuesday, helping the Hang Seng Index (INDEXHANGSENG:.HSI) and the Shanghai Composite Index (SHA:000001) extend gains for the week.
The Shanghai Composite Index (SHA:000001) rose 14.8 points or 0.5% while the Hang Seng Index (INDEXHANGSENG:.HSI) edged 58.4 points or 0.2% higher fro the day.
Oversold real estate stocks took the lead on the Mainland. China Vanke (SHE:200002), the largest Chinese property developer, rose 0.9% while Poly Real Estate (SHA:600048) rose 3.5%. Aluminum Corp. of China (SHA:601600) rose 2.0% in Shanghai but fell 4.0% in Hong Kong, highlighting the asymmetry between the two key Chinese markets.
While Shanghai is driven by domestic news, investors in Hong Kong follow U.S. market sentiment. The city state's finances, interest rate and currency just to name a few, are tied to that of the U.S., making it susceptible to U.S. market fluctuations.
Looking at components of key Chinese ETFs on Tuesday, the good news is that most small cap and large cap stocks advanced. This bodes well for both the iShares FTSE/Xinhua 25 China Index (NYSE:FXI) and the Guggenheim Small Cap China Fund (NYSE:HAO).
Earnings are going to continue to play a major role in Chinese ADR prices. Mindray Medical (NYSE:MR) reported a record fourth quarter and reissued sound revenue guidance. Internet giant Sina Corp. (NASDAQ:SINA) and Shanda Games (NASDAQ:GAME) are on the menu for the rest of the week.