April 21, 2011 (Chinavestor) Strong U.S. earnings sent China stocks higher in Asia on Thursday. The Hang Seng Index (INDEXHANGSENG:.HSI) jumped 242.2 points or 1.0% on top of the 375 points advance the day before as tech earnings in the U.S. surprised to the upside. Investor sentiment improved in Shanghai as well, sending the Shanghai Composite Index (SHA:000001) 20.2 points or 0.7% higher for the day. Most of the gains were attributed to energy stocks, a sector that is driven by record oil prices. Price of the crude hit $112/barrel driven by anticipated strong U.S. demand.
Petrochina Co. Ltd. (HKG:0857)(SHA:601857) advanced 1.9% in Hong Kong and 0.5% in Shanghai while CNOOC Ltd. (NYSE:0883) surged 2.2%. Chinese coal miners caught fire given the price of the commodity is tied to that of oil in China. China Shenhua (HKG:1088), the largest Chinese coal miner, surged 3.8% while Yanzhou Coal (HKG:1171)(NYSE:YZC) rose 2.6%.
The rally was universal on the Mainland where stocks that advanced outnumbered those that fell five to one among components of the Shanghai Composite Index (SHA:000001).
But while high oil prices buoyed the energy sector, airliners and power generators fell. Price of kerosene hit a record high in Singapore, squeezing Chinese airliners' profits. Both China Eastern Airlines (HKG:0670) and Air China (HKG:0753) were among the bottom five components of the Hang Seng Index (INDEXHANGSENG:.HSI).
Chinese ETFs did well on Wednesday and are poised to do the same on Thursday, if trading in Asia can serve as proxy. Most components of the Xinhua 25 Index, the underlying index of the iShares FTSE/Xinhua 25 China Index (NYSE:FXI), advanced in Hong Kong. Small caps experienced a broad rally as well, stocks that advanced outnumbered those that fell four to one among components of the Guggenheim Small Cap China Fund (NYSE:HAO).
China Unicom (NYSE:CHU) was among the best performing Chinese stocks on Wednesday and contionued to advance in Asia on Thursday. Chines solar stocks are expected to join the rally as oil prices hit record highs.
If components of the Hang Seng Index (INDEXHANGSENG:.HSI) can serve as proxy for large cap China ADR trading, outlook is best for China Unicom (NYSE:CHU), CNOOC Ltd. (NYSE:CEO) and Yanzhou Coal Mining (NYSE:YZC).