August 4, 2011 (Chinavestor) Chinese stocks extended the slide in Hong Kong, sending the Hang Seng Index (INDEXHANGSENG:.HSI) 108.0 points or 0.5% lower on Thursday. Airliners advanced on falling oil/kerosene prices but most components of the index declined. Stocks that fell outnumbered those that advanced four to one among components of the 42 member index. But the picture was different on the Mainland. The Shanghai Composite Index (SHA:000001) advanced 5.6 points or 0.2% as investors focused on Chinese macro economic indicators. Monetary tightening kept Chinese stocks at bay for most of 2011 but that is about to change as global economic woes render additional tightening measures unnecessary. Falling financial stocks bode ill for the iShares/FTSE Xhinua 25 China index (NYSE:FXI) but the Guggenheim China Small Cap ETF (NYSE:HAO) is expected to weather the storm better.
China Southern Airlines (SHA:601766), the largest domestic airline, was among the best five stocks in Hong Kong and Shanghai as well. China Mobile (HKG:0941)(NYSE:CHL), the largest mobile carrier in the world, rose the most among components of the Hang Seng Index (INDEXHANGSENG:.HSI). Latest subscriber numbers suggests CHL is going to retain its leading position in the 3G smartphone arena as well.
Air China (HKG:0753) was behind China Coal (HKG:1898) among best performing stocks of the 25 member Xinhua 25 Index. But most components of the index fell, boding ill for the iShares FTSE/Xinhua China 25 Index (NYSE:FXI). The decline was less universal among small cap stocks where stocks that fell outnumbered those that advanced two to one.
Earnings sank China BAK Battery (NASDAQ:CBAK) on Wednesday while AgFeed Industries (NASDAQ:FEED) continued to slide. The latter dived over 30% a day before and is off almost 50% in just two days.
Outlook remains sound for NYSE listed Chinese carriers, such as China Southern Airlines (NYSE:ZNH) and China Eastern Airlines (NYSE:CEA), if components of the Hang Seng index (INDEXHANGSENG:.HSI) were proxy for ADR trading. But chances are that CNOOC Ltd. (NYSE:CEO) and China Telecom (NYSE:CHA) will decline on Thursday.