October 12, 2011 (Chinavestor) Hopes that Slovakia will give the European rescue package another chance lifted China stocks in Asia. The Hang Seng Index (INDEXHANGSENG:.HSI) erased early losses ending 187.9 points or 1.0% higher for the day. China Cosco (HKG:1919), the largest dry bulk shipping company in the world, surged 10.2% on valuation. Aluminum Corp. of China (HKG:2600) advanced 8.5% after Alcoa Inc. (NYSE:AA) reported earnings. Value investors stepped forward after China's aluminum maker fell over 30% in the last three months. Chinese airlines continued to recover, China Southern Airlines (HKG:1055) advanced 5.36% followed closely by China Eastern Airlines (HKG:0670). But telecoms failed to gain traction and fell, led by China Telecom (HKG:0728) and China Mobile (HKG:0941).
Investors on the Mainland shrugged off global economic worries and went on to a buying spree. Each and every stock among the 50 largest components of the Shanghai Composite Index (SHA:000001) advanced. The reason for the rally is news that the government started to support the market via buying up shares of undervalued financial institutions. The first such step was China's sovereign fund Huijin buying up domestic bank shares. The step is seen as a support for the market. Financial stocks soared following the news.
The euphoria in Shanghai dragged over to Hong Kong to a certain extent. The Hang Seng China Enterprises Index (INDEXHANGSENG:.HSCEI), measuring the performance of mainland Chinese shares in Hong Kong, advanced 2.14%, far outperforming the broad market. All but four components of the 25 member Xinhua China 25 Index advanced, boding well for the iShares FTSE/Xinhua China 25 Index (NYSE:FXI) ahead the market open.