March 18, 2011 (Chinavestor) Chinese stocks continued to recover on Friday as Japan contained the fallout from the Fukishima nuclear plant. The Hang Seng Index (INDEXHANGSENG:.HSI) advanced 15.8 points or 0.1% on Friday, ending the week 949.5 points or 4.0% lower. But the Shanghai Composite Index (SHA:000001) managed to minimize impact from Japan as investors focused on earnings and economic data for most of the week. The index advanced 12.1 points or 0.4% on Friday and is off only 24.4 points or 0.8% for the week.
ETFs tied to Hong Kong indices, such as the iShares FTSE/Xinhua 25 China Index (NYSE:FXI) and the Guggenheim Small Cap China Fund (NYSE:HAO), remain vulnerable.
Energy and related companies fell the hardest in Hong Kong for the week. China Southern Airlines (HKG:1055) ( NYSE:ZNH), the largest Chinese airline, tumbled 3.8% on Friday as airliners were caught in rising oil prices. The U.N. moved closer to a military solution in Libya sending oil prices higher for Friday. H-shares of Petrochina Co. (NYSE:PTR) and Sinopec (NYSE:SNP), the two largest Chinese integrated oil companies, fell 3.8%, each on Friday. But volatility remained high for components of the Hang Seng Index (INDEXHANGSENG:.HSI), testified by Shanghai Electric (HKG:2727) that jumped 7.1% after a 12.6% collapse the day before.
Investors were less panicy on the Mainland where corporate earnings reassured investors that fundamentals are right for industry leaders. Petrochina Co. Ltd. (SHA:601857) reported preliminary numbers that beat estimates while good news on the economic front suggested Beijing is able to rein on growth and inflation going forward.
Looking at components of Chinese ETFs on Friday, large caps are in danger. Stocks that fell outnumbered those that advanced two to one among components of the iShares FTSE/Xinhua 25 China Index (NYSE:FXI). Huaneng Power International (NYSE:HNP) was the best performing component of the underlying index but Petrochina Co. Ltd. (NYSE:PTR) and Sinopec Corp. (NYSE:SNP) weighted down the index. Telecoms stocks were under pressure after China Mobile (NYSE:CHL) announced large capital spending for 2011. H-shares of China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA) were among the worst of the 25 member iShares FTSE/Xinhua 25 China Index (NYSE:FXI).
Small caps preformed much better as components of the Guggenheim Small Cap China ETF (NYSE:HAO) testify. Stocks that advanced outnumbered those that fell two to one, a complete opposite of large cap stocks.
Volatility remained high for Chinese ADRs on Thursday with selected stocks on the advance. But investors shunned smaller NASDAQ names such as China Integrated energy (NASDAQ:CBEH) or China Automotive Systems (NASDAQ:CAAS).