July 22, 2011 (Chinavestor) Sound corporate earnings pushed the DJIA over 150 higher on Thursday, giving a significant boost to stocks in Hong Kong. The Hang Seng Index (INDEXHANGSENG:.HSI) surged 457.5 points or 2.0% in a broad rally and large volume. China stocks edged higher in Shanghai as well, sending the Shanghai Composite Index (SHA:000001) 4.9 points or 0.2% higher for the day. Given that small and large cap Chinese ETFs did well on Thursday and index futures point to a higher open, outlook is bright for the iShares FTSE/Xinhua China 25 Index as well as for the Guggenheim China Small Cap ETF (NYSE:HAO). Time looks ripe for the PowerShares Golden Dragon Halter USX China Shares (NYSE:PGJ), tracking the performance of U.S. companies doing business in China, to shine.
The rally was universal in Hong Kong, all but three components of the 25 member Hang Seng Index (INDEXHANGSAENG:.HSI) rose. Chinese shipping companies, China COSCO (HKG:1919), China Shipping Container Lies (HKG:2866) and China Shipping Development (HKG:1138) were among the best 5 performing components of the Hang Seng Index (INDEXHANGSENG:.HSI). Shipping lanes were oversold after global economic slowdown hurt outlook for the sector, a fear that is now subdued. China Life Insurance (NYSE:LFC) was the best performing NYSE cross-listed ADR followed by HSBC Plc. (NYSE:HBC) and CNOOC Ltd. (NYSE:CEO).
Most components of key Chinese ETFs improved in Asia on Friday. All but one component of the underlying index for the iShares FTSE/Xinhua China 25 Index (NYSE:FXI) advanced, raising outlook for the most liquid Chinese ETF. Zijin Mining (HKG:2899), the largest Chinese gold miner, fell as investors returned to riskier assets and shunned gold after outlook for the Greece's finances improved. Chinese shipping and energy stocks pulled the FXI the most, but China Telecom (HKG:0728) and China Unicom (HKG:0762) were underdogs following monthly subscriber growth data.
Small cap China stocks enjoyed a broad rally not seen for a long time. Stocks that advanced outnumbered those that fell fifteen to one among components of the Guggenheim China Small Cap ETF (NYSE:HAO). Strong corporate earnings from GE (NYSE:GE), most of the growth coming from overseas markets, are expected to boost outlook for the PowerShares Golden Dragon Halter USX China Shares (NYSE:PGJ) as well.