August 8, 2011 (Chinavestor) Chinese stocks collapsed in Asia on Monday following the first ever U.S. debt downgrade. The Hang Seng Index (INDEXHANGSENG:.HSI) fell 455.6 points or 2.2% for the day on top of a 6.7% slide last week. But the Mainland experienced the most dramatic sell-off, sending the Shanghai Composite Index (SHA:000001) 99.6 points or 3.9% lower for the day. This was the single most dramatic decline of the index for the year. Each and every large cap component of the index fell in Shanghai except for Zijin Mining (601899), China's largest gold miner. Price of gold passed $1,700 per ounce for the first time as investors were seeking safety other than the dollar.
The sell-off was universal in both key Asian markets resource stocks suffering the most. Each and every component of the 42 member Hang Seng Index (INDEXHANGSENG:.HSI) fell for the second day in a row, a sell-off not seen for three years. China Life Insurance (NYSE:LFC) was the most oversold China stock among components of the Hang Seng Index (INDEXHANGSENG:.HSI) but airliners weathered the storm relatively well thanks to falling oil prices.
Resource stocks fell the most among large cap components of the Shanghai Composite Index (SHA:000001). The index fell just shy of 100 points, a drop not seen since November 16, 2010.
Index futures point to a sharply lower open for U.S. markets following the U.S. debt downgrade. If components of the Hang Seng Index (INDEXHANGSENG:.HSI) were proxy for China ADR trading, outlook is best for China Southern Airline (NYSE:ZNH) and China Eastern Airline (NYSE:CEA), but Aluminum Corp. of China (NYSE:ACH) and China Life Insurance (NYSE:LFC) are going to gap way lower.
On a croporate front, earnings will continue to move China stocks. For a detailed earnigns calendar, visit China stock earnings calendar, Aug. 8-12