June 10, 2011 (Chinavestor) Chinese shares faltered in Asia on Friday after statistics showed trade surplus came out less than expected. China's trade imbalance were $13.1 billion, less than expected, as a result of higher import costs. The Hang Seng Index (INDEXHANGSENG:.HSI) fell 189.5 points or 0.8% on Friday, making it the sixth negative market day in a row. The index is off almost 1,000 points or 4% since June 1st. But investors were less bearish on the Mainland, helping the Shanghai Composite Index (SHA:000001) eke out a small 2.8 points or 0.1% gain for the day. The index ended the week flat, gaining 1.0 point or 0.1% since Monday.
Chinese ADRs remained volatile on Thursday with some oversold stocks coming back strong. Home Inns & Hotels Management (NASDAQ:HMIN) broke a negative trend while Baidu.,com Inc. (NASDAQ:BIDU) and Sohu.com Inc. (NASDAQ:SOHU) bounced off the oversold position as well.
Most large cap stocks fell in Hong Kong with stocks in the red outnumbering those that advanced four to one among 42 components of the Hang Seng Index (INDEXHANGSENG:.HSI). The sell-off was even more eminent among components of the Xinhua China 25 Index. Only Zijin Mining (HKG:2899), the top Chinese gold miner, managed to advance for the day.
The broad large cap sell-off bodes ill for Chinese ETFs. The iShares FTSE/Xinhua China 25 Index (NYSE:FXI) is expected to fall on Friday, following H-shares lower. But outlook is somewhat brighter for small caps. Stocks that fell outnumbered those that advanced three to one among components of the Guggenheim China Small Cap ETF (NYSE:HAO). This is a much better ratio than that of the iShares FTSE/Xinhua China 25 Index (NYSE:FXI).
High volatility is persistent for Chinese ADRs. Synutra International (NASDAQ:SYUT) advanced over ten percent for the day but the slide continued to China Green Agriculture (NYSE:CGA), China Biotics (NASADAQ:CHBT) and WSP Holdings (NYSE:WH). These stocks lost 16.5%, 35.5% and 29.1% in the past five trading days!
But interent stocks bounced back, led by Baidu.com Inc. (NASDAQ:BIDU) and Sohu.com Inc. (NASDAQ:SOHU). Oversold Home Inns & Hotels Management (NASDAQ:HMIN) came back even stronger, advaning over 6% for the day.