China Rate Rise Speculation; 3-year Bills

123jump.com Staff
07 Apr, 2010
New York City

Stocks in China declined on the worries that rates may be on the rise sooner than expected. People

[R]5:00 AM Hong Kong, China – Stocks in China declined on the worries that rates may be on the rise sooner than expected. People’s Bank of China plans to offer 3-year bills for the first time after 22 months. Property developers led the decliners in Shanghai trading.[/R]

Stocks in Shanghai declined on the rate worries and a stubborn inflation. China’s economy is expected to surge in the first quarter at 12% annual rate according to the China Securities Journal. Central bank is also offering shorter term bonds for the first time in 22 months.

People’s Bank of China plans to sell 3-year debt for the first time since June 2008 and raise 15 billion yuan.

The short term debt offering was widely perceived as a move by the central bank to raise interest rate in the near future and lift the value of the yuan against the dollar.

The 3-year bill is expected to yield close to 2.75% and stocks in Shanghai declined on the rate increase worries.

Finance ministry sold five-year bonds that yielded 2.7% and raised 28 billion yuan.

Hang Seng index in Hong Kong increased 391.77 or 1.82% to 21,928.77, and CSI 300 index in China lower 18.20 or 0.53% to 3,386.95. Property developers led the decliners in trading.

U.S. Treasury Secretary Timothy F. Geithner departed from his two-day visit to India to Beijing on an unscheduled trip. The unscheduled trip closed to media is for a meeting with Chinese Vice Premier Wang Qishan in Beijing today.

The trip comes after U.S. Treasury Department delayed its semi-annual review of currency policies of leading U.S. trading partners. China is the second largest partner with total trade of $366 billion and trade deficit of $226.8 billion.

Shanghai Movers

Anhui Gujing Distillery Company Limited advanced 3.7% to 43.50 yuan after the company announced that it expects its net profit for fiscal first quarter 2010 to grow by 150% to 200% or between 75.1 million yuan and 90.12 million yuan, compared to that of same period last year 30 million yuan.

China Vanke Co., Ltd dropped 1.4% to 9.46 yuan after the real estate developer announced yesterday that its property sales rose 2.8% to 6.31 billion yuan in March from a year ago month.

Chongqing Changan Automobile Company Limited added 0.5% to 12.90 yuan.

Chongqing Dima Industry Co surged daily 10% limit after the company said it will acquire real estate developer from the parent through a stock swap. The news was first quoted on Bloomberg.

Haitong Securities Company Limited decreased 1.3% to 16.57 yuan after the brokerage was downgraded to “neutral” from “add” at Southwest Securities Co.

Hubei Fuxing Science and Technology Co., Ltd fell 0.6% to 11.83 yuan after the company said its first-quarter profit surged 250% to 300% from a year earlier.

Shandong Dong-E E-Jiao Co gained 3.7% to 30.71 yuan after Chinese herbal medicine maker estimated first quarter net increase of between 100% and 150%.

HK Movers

China Construction Bank Corporation added 3.6% to HK$6.75 after the bank is preparing to raise around 75 billion yuan. Bank of China and ICBC are also working to raise at 25 billion yuan capital in the next few months.

CNOOC Limited the offshore energy explorer increased 5.6% to HK$13.82.

Xinao Gas Holdings Limited gained 4.2% to HK$22.20 after the stock was upgraded to “overweight” at Morgan Stanley.