July 29, 2011 (Chinavestor) Chinese stocks dropped on Friday in both key Asia markets after the House failed to pass a vote on debt. The Hang Seng Index (INDEXHANGSENG:.HSI) fell 130.5 points or 0.6% on Friday after a universal decline. Only eight components of the 42 member index advanced while the rest fell. But value investors stepped up and bought oversold Huaneng Power Int. (HKG:0902). China Southern Airlines (HKG:1055) advanced after two days of selling as oil dropped below $96 a barrel. But index heavy weight Petrochina Co. Ltd. (HKG:0857) fell hard along with China Telecom (HKG:0728). Chinese coal miners declined as well as price of oil and coal fell. China Shenhua Energy (HKG:1088), the largest coal miner in China, fell 2.2%, the most among listed miners in Hong Kong.
The Shanghai Composite Index (SHA:000001) shed 7.0 points or 0.3% for the day but is off 2.5% for the week. Chinese banks advanced but failed to lift the index. Resource stocks led the decline of the Shanghai Composite Index (SHA:000001) on Friday as fears of a global economic slowdown revved up.
Outlook for Chinese ETFs is dim ahead the opening bell on Friday. All but three components of the iShares/FTSE/Xinhua China 25 Index (NYSE:FXI) fell in Asia on Friday, boding ill for the ETF. But the decline was less universal among smaller names. Stocks that fell outnumbered those that advanced three to one among components of the Guggenheim China Small Cap ETF (NYSE:HAO).