October 24, 2011 (Chinavestor) Chinese stocks opened last week of October with some gusto after China's PMI, the index measuring manufacturing activity, showed growth for the first time in four month. The Hang Seng Index (INDEXHANGSENG:.HSI) surged 746.1 points or 4.0% while the Shanghai Composite Index (SHA:000001) rose 53.1 points or 2.2%. The rally was universal, stocks that advanced outnumbered those that fell fourteen to one among components of the 42 member Hang Seng Index (INDEXHANGSENG:.HSI). Even better, each and every component of the Xinhua 25 Index rose, boding well for the iShares FTSE/Xinhua China 25 Index (NYSE:FXI), the most liquid Chinese ETF. Resource, shipping and coal sectors, those that fell the hardest earlier the month, led the rally. The advance in Shanghai came at a time when the index hit fresh 13 months lows. Investors on the mainland are concerned about additional monetary tightening when inflation is the top priority of policy makers. But the market couldn't ignore sound manufacturing data. The rally was universal among large caps, each and every stock of the 50 largest components of the Shanghai Composite Index (SHA:000001) advanced. Oversold insurance and securities companies led the advance after a heavy sell-off in October sent their shares to year lows. China Pacific Insurance (SHA:601601) and Ping an Insurance (SHA:601318) surged 4.8% and 5.3%, each.
Looking at components of the iShares FTSE/Xinhua China 25 Index (NYSE:FXI), Aluminum Corp. of China (HKG:2600) and Yanzhou Coal (HKG:1171) were among the best NYSE cross listed stocks, besides airliners. China Eastern Airlines (HKG:0670) surged 7.25% while China Southern Airlines (HKG:1055) advanced 5.5%.
If components of the Hang Seng Index (INDEXHANGSENG:.HSI) were proxy for ADR trading, outlook is best for airliners, resource and energy stocks. Telecom stocks, providers of cushion during bear markets, were trailing the broad index.