April 6, 2011 (Chinavestor) Despite a surprise interest rate hike on Tuesday, Chinese stocks rose on Wednesday. The Shanghai Composite Index (SHA:000001) advanced 33.9 points or 1.1% to close over the 3,000 level for the first time in a month. The Hang Seng Index (INDEXHANGSENG:.HSI) rose134.5 points or 0.6% with financial stocks making up the lion share of trading.
HSBC Plc. (HKG:0005), a Hang Seng Index (INDEXHANGSENG:.HSI) index heavy weight, rose 1.1% while China Life Insurance (HKG:2628) jumped 1.8%. But airliners continued to show weakness as price of oil leveled off at over $108/barrel. Petrochina Co. Ltd. (HKG:0857), the largest Chinese oil producer, rose 1.16% but overbought CNOOC Ltd. (HKG:0883) succumbed to profit taking and fell 1.7% on Wednesday.
Financial related stocks took the lead in Shanghai a day after the interest rate hike. Huaxia Bank (SHA:600015) and Bank of Communications (SHA:601328) were the two best performing large components of the Shanghai Composite Index (SHA:000001). Ping An Insurance (SHA:601318), a company deriving 15% of its profits from investment activities, advanced 3.9% as outlook for profitability of insurers rose.
Zijin Mining (HKG:2899), the largest Chinese gold miner, surged 3.8% as investors embraced commodity and gold stocks in quest for safety. China Life Insurance (HKG:2628), the largest Chinese life insurer, was the best performing NYSE-HKEX cross listed component of the iShares FTSE/Xinhua 25 China Index (NYSE:FXI) after profit outlook improved. But Air China (HKG:0753) fell as oil prices continued to mount.
Small cap stocks were mixed in Asia as components of the Guggenheim Small Cap China Fund (NYSE:HAO) testify. Stocks that advanced outnumbered those that fell two to one among components of its undelying index.
Index futures suggests a higher opening for American exchanges as Japan seems to be able to contain the fallout from the nuclear accident. But China stock investors continue to trade lightly, evidenced by the lack of action in the large cap China ADR arena on Tuesday. If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as proxy for ADR trading, outlook is good for China Life Insurance (NYSE:LFC), Petrochina Co. Ltd. (NYSE:PTR), and HSBC Plc. (NYSE:HBC) but dim for China Southern Airlines (NYSE:ZNH) and China Eastern Airlines (NYSE:CEA). For a technical reading of Chinese ADRs, visit the overbought/oversold section of Chinavestor.com.