HK Index Rises 2.5%; Trade Surplus Shrinks

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
10 May, 2010
New York City

The indexes in China rebounded as other indexes in Asia after the European leaders offered nearly $1 trillion in stabilization funds. Trade surplus shrank 79% in April. The Hong Kong index which generally tracks the U.S. closed sharply up 2.5%.

[R]10:35 PM Hong Kong, China – Poly April sales flat year-over-year at HK$4 billion. Bright Food bids A$1.75 billion for CSR’s sugar unit. Chu Kong Pipe bags major pipe orders from CNPC Sinopec and CNOOC. Bank of China to invest 7.5 billion yuan on Shanxi Railway Project.[/R]

China stocks rebounded after briefly entering a bear market on concern a slowdown of the economy may delay increases in borrowing costs and a European loan package will keep the regions credit crisis from spreading.

Trade surplus in China shrank 87% in April from a year earlier as imports grew faster than exports because of stimulus-driven domestic demand.

The 79% decline in the first four months of 2010 from a year earlier will ease pressure for gains in the yuan and support Premier Wen Jiabao’s argument that the currency is not undervalued.

The Democratic Republic of Congo said it won’t approve a $284 million bid by Zijin Mining Group Co and CAD Fund to buy out copper mine developer Platmin Congo since it violates local regulations. The offer is ‘in violation of the applicable regulations’ said Alexis Mikandji Penge, the Chief of staff for the minister of mining in an e-mailed statement.

The African nation has one of the worst business climates according to the ‘Doing Business Guide’ published by World Bank fro 2010.

The Hang Sang Index of Hong Kong posted its biggest weekly drop since November forcing Strikeforce Mining & Resources Plc, the Russian Molybdenum producer to delay its proposed IPO after Swire Properties Ltd did so two days earlier.

There maybe others like Atlanta-based Americold Realty Trust and GSW Immobilien AG of Berlin following suit, according to Fulbright Securities Ltd and Louis Capital Markets HK Ltd.

Hang Seng index in Hong Kong increased 506.35 or 2.54% to 20,426.64 and CSI 300 index in China higher 21.44 or 0.76% to 2,858.23.

Shanghai Movers

Air China Limited plunged 10.0% to 11.06 yuan after the international carrier said it cancelled six flights yesterday and postponed another three because of volcanic ash from Iceland.

Baoshan Iron & Steel Co Ltd rose 0.7% to 6.48 yuan after the publicly listed steelmaker may face major difficulties in the second half as the cost pressure is very high.

Bright Dairy & Food Co., Ltd rose 0.3% to 9.76 yuan after the food company raised its offer for CSR Ltd.’s sugar unit to A$1.75 billion ($1.6 billion) after the Australian group’s plan to spin off the division was blocked.

China Eastern Airlines Corporation Limited, the carrier, dropped 5.0% to 7.55 yuan.

China Petroleum & Chemical Corporation rose 1.0% to 9.10 yuan, after the oil refiner, the Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited announced that the total value of the Group’s signed orders to provide quality oil and natural gas pipe for China National Petroleum Corporation, China Petroleum & Chemical Corporation and China National Offshore Oil Corporation amounted to about 834 million yuan as on April 30th.

China Southern Airlines Company Limited plunged 10.0% to 6.99 yuan. The carrier China Eastern Airlines and the company are seeking to launch a JV cargo carrier with Air France KLM, according to KLM Senior VP-Route Network Pieter Elbers.

Ping An Insurance (Group) Company of China, Ltd the insurer advanced 4.0% to 48.21 yuan.

Poly Real Estate Group Co., Ltd added 3.0% to 10.92 yuan after the listed property developer’s recorded revenue of HK$4.09 billion in April 2010 from the sale of 496,900 square meters of gross floor area, roughly equivalent to the same period last year, the company announced May 9, guandian.cn reported.

HK Movers

Bank of China Limited rose 2.5% to HK$4.00 after the lender said that it plans to invest 7.5 billion yuan on the Shanxi-Shandong railway project and hold a 14.45% stake in the operator of the railway, according to a company filing.

Esprit Holdings Limited gained 3.9% to HK$51.60.

Li & Fung Limited increased 4.1% to HK$37.30 after the trading and sourcing company raised $400 million from a 10-year offering its second US dollar bond ever.

Standard Chartered PLC climbed 4.0% to HK$195.60 after the lender said India’s rupee is likely to strengthen as measures to solve a debt crisis in Europe spurs demand for assets in the best-performing economies and policy makers favor appreciation of the currency to help control inflation.