March 25, 2011 (Chinavestor) The broad rally of the Dow Jones Industrial Average (INDEXDJX:.DJI) yesterday didn't go unnoticed in Asia, sending Chinese shares higher on Friday. The Hang Seng Index (INDEXHANGSENG:.HSI) surged 243.4 points or 1.1% with most of its components ending the day higher. The rally was universal, stocks that advanced outnumbered those that fell four to one among 42 members of the index. Large caps led the rally in Hong Kong as is evidenced by the almost universal advance of components of the iShares FTSE/Xinhua 25 China Index (NYSE:FXI).
Investors turned bullish on the Mainland as well after Bank of China reported strong profits on record lending. The Shanghai Composite Index (SHA:000001) rose 31.6 points or 1.1%, approaching the psychologically important 3,000 level.
Oversold real estate stocks took the lead on the Mainland; China Vanke (SHE:200002), the largest property developer of the nation, rose along with Poly Real Estate (SHA:600048), a component of the Shanghai Composite index (SHA:6000001).
Value investors returned to the market in Hong Kong, buying up oversold airliners in Hong Kong. China Southern Airlines (HKG:1055), the largest Chinese carrier, rose the most among components of the Hang Seng Index (INDEXHANGSENG:.HSI). HSBC Holdings (HKG:0005) rose on Bank of China's strong earnings while resource plays outperformed as well. Aluminum Corp. of China (HKG:2600), the third largest aluminum maker of the world, was among the best performing NYSE-HKEX cross listed blue chips.
China Life Insurance (HKG:2628) continued to suffer in Hong Kong as components of the iShares FTSE/Xinhua 25 China Index (NYSE:FXI) testify. China Unicom (HKG:0762), the second largest Chinese mobile carrier, fell 0.5% after surging 7% for the week.
Small caps lagged larger counterparts in Hong Kong. Stocks that advanced outnumbered those that fell two to one among components of the Guggenheim Small Cap China ETF (NYSE:HAO) in Asia on Friday.
Small cap Chinese ADRs remained volatile in the U.S. yesterday. Gigamedia Ltd. (NASDAQ:GIGM), FUQI International (NASDAQ:FUQI) reported double digit gains but China Information Tech. (NASDAQ:CNIT) fell 16.3% following a stock downgrade.
If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as proxy for ADR trading, outlook is solid for Aluminum Corp. of China (NYSE:ACH) and China southern Airlines (NYSE:ZNH), but China Unicom (NYSE:CHU) is going to take a breath on Friday. China Life Insurance (NYSE:LFC) is going to drift along the markets.