April 15, 2011 (Chinavestor) Chinese shares traded sideways in Asia on Friday. The Shanghai Composite Index (SHA:000001) eked out a small, 8.2 points or 0.3% gain, after economic data suggested more fiscal tightening is on the way. First quarter GDP growth for China reached 9.8% while inflation accelerated, prompting investors to speculate that the government will introduce additional measures to cool growth. Some fear that an inflation bubble is building despite efforts from the government to reign it. Investors in Hong Kong kept one eye on the Mainland and the other in the U.S. where Google's first quarter profit disappointed as costs grew faster than expected. The Hang Seng Index (INDEXHANGSENG:.HSI) shed 5.9 points or 0.0% on Friday.
The rally seems to be over for Chinese internet stocks following Google's quarterly report. Chinese agriculture stocks fell hard on Thursday. AgFeed Industries, Inc., (NASDAQ:FEED) was the worst performing Chinese ADR falling to a new 52 week low but China Green Agriculture (NYSE:CGA), and Zhongpin Inc. (NASDAQ:HOGS) experienced heavy sell-off as well.
Chinese airliners advanced the most among components of the Hang Seng Index (INDEXHANGSENG:.HSI). Volatility remains high for the sector following wild swings in the price of oil. But iron and steel producers fell hard on Friday in Hong Kong as output exceeded demand, hurting prices of the material. Record high iron ore prices are additional headache for Chinese steel makers, squeezing their profits.
Looking at components of key Chinese ETFS, outlook is uncertain on Friday morning. Stocks that advanced outnumbered those that fell two to one among 25 members of the iShares FTSE/Xinhua 25 China Index (NYSE:FXI). While this is boding well for large caps, index futures point to a lower open on the NYSE.
Negative market sentiment may continue to hurt Chinese food stocks such as AgFeed Industries, Inc., (NASDAQ:FEED) and China Green Agriculture (NYSE:CGA). Zhongpin Inc. (NASDAQ:HOGS) and Tianli Agritech (NASDAQ:OINK) fell for most of the week and remain under pressure before the opening bell on Friday.