August 30, 2011 (Chinavestor) Chinese stocks found clues in a resurgent U.S. market and advanced in Hong Kong, sending the Hang Seng Index (INDEXHANGSENG:.HSI) 339.1 points or 1.7% higher on Tuesday. But investor moved didn't improve on the Mainland hurting the Shanghai Composite Index (SHA:000001) even more after a steep fall a day before. The additional monetary tightening on Monday when government ordered banks to set more cash aside kept investors off-guard. Tee index fell 1.4% on Monday and shed another 0.4% on Tuesday.
But investors found support for the market in Hong Kong where each and every component of the Xinhua China 25 Index advanced, boding well for the iShares FTSE/Xinhua China 25 Index (NYSE:FXI) before the opening bell. Components of the index on the move included China Unicom (NYSE:CHU), Aluminum Corp. of China (NYSE:ACH) and Petrochina (NYSE:PTR). Albeit not as universal, small caps enjoyed a broad rally as well raising hopes for small cap ETF, the Guggenheim China Small Cap ETF(NYSE:HAO) as well.
Strong corporate earnings continued to lift Chinese stocks in Hong Kong. China Unicom (NYSE:CHU), the second largest Chinese mobile carrier, reported better then expected revenue and net profit growth last week and has been outperforming the rest of the sector since. H-shares of the company rose 4.4% on Tuesday. Yanzhou Coal Mining (HKG:1171)(NYSE:YZC) was the best performing NYSE cross-listed component of the Hang Seng Index (INDEXHANGSENG:.HSI) thanks to a 4.8% rise. Investors had enough of the fall of Aluminum Corp. of China (HKG:2600)(NYSE:ACH) and sent the stock 4.0% higher for the day. Petrochina Co. Ltd. (HKG:0857)(NYSE:PTR), the largest Chinese oil producer, advanced 3.7% after reporting a sound first 6 months despite weakening oil prices.
Most components of Chinese ETFS advanced in Asia on Tuesday morning. The rally was universal among 25 members of the iShares FTSE/Xinhua China 25 Index (NYSE:FXI). Aluminum Corp. of China (HKG:2600), Petrochina Co. Ltd. (HKG:0857) and CNOOC Ltd. (HKG:0883) were among the best components of the index. But ICBC, the largest Chinese financial institution, weighted on the index after bank reserve rations were lifted on Monday.