March 10, 2011 (Chinavestor) China's surprise February trade deficit, Spanish debt downgrade and ongoing civil war in Libya are all responsible for the steep slide of Chinese stocks in Asia. The Hang Seng Index (INDEXHANGSENG:.HSI) fell 195.2 points or 0.8%, half of the Shanghai Composite Index (SHA:000001) that tumbled 44.0 points or 1.5%.
The sell-off was universal in Shanghai, all but thee of the 50 largest components of the Shanghai Composite Index (SHA:000001) fell. But Hong Kong wasn't much better either; stocks that fell outnumbered those that advanced seven to one among 42 members of the Hang Seng Index (INDEXHANGSENG:.HSI).
Chinese caustomrs show that the country slipped to a trade deficit of $7.3 billion in February as iron ore, soy mean and oil prices jumped. Analysts were expecting a $2.4 billion surplus, not a deficit. The last time China reported trade deficit was in March 2010.
Looking at components of key Chinese ETFs in Asia this morning, small caps looks better. Components of the Guggenheim Small Cap China Fund (NYSE:HAO) were mixed but most components of the iShares FTSE/Xinhua 25 China Index (NYSE:FXI) fell, boding ill for large cap stocks.
Looking at Chinese ADRs, earnings are going to remain in focus. Strong quarterly reports have lifted shares of Focus Media Holdings (NASDAQ:FMCN), Home Inns & Hotels Management (NASDAQ:HMIN), and KongZhong Corp. (NASDAQ:KONG) lately. China Sky One Medical, Inc. (NASDAQ:CSKI) roared 22.3% on Wednesday amid high volume, a non-earnings related move. But index futures point to a lower open as jobless claims reading disappointed.