July 6, 2012 (Chinavestor) China stocks soared in Shanghai but were looking for direction in Hong Kong on the first week of July. The Shanghai Composite Index (SHA:000001) surged 22.2 points or 1.0% after China's central bank cut interest rates for the second time this year. Lower interest rates helped property developers as investor argued that capital intensive sectors, like real estate, will benefit from flexible rates. Poly Real Estate (SHA:600048), the largest Shanghai listed such firm, surged 5.0% on Friday after a 1.8% advance on Thursday. This made the stock the best component among the 50 largest components of the broad Shanghai Composite Index (SHA:000001). China Vanke (SHE:200002), the largest property developer listed in the Shenzhen Stock Exchange, outperformed the broad market as well.
But things were different in Hong Kong where investors paid a lot more attention to international developments. Spain's borrowing costs soared to 7% again, highlighting the tough road Europe's economy is facing going forward. The Hang Seng Index (INDEXHANGSENG:.HSI) traded water for most of the day, shedding 8.5 points for the day. Thursday's losers became Friday's gainers, like Huaneng Power (HKG:0902) and Huadian Power (HKG:1071). Airliners recovered from Thursday's sell-off, too.