China Stocks Reach New Lows

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

Stocks decline led by property developers. CSCEC plans to build Shenzhen''s third tallest building. Nanjing Iron & Steel to acquire coal mining assets in Anhui. CNOOC confirms oilfield development deal in Iraq.

[R]7:00 PM Hong Kong, China – Stocks decline led by property developers. CSCEC plans to build Shenzhen''s third tallest building. Nanjing Iron & Steel to acquire coal mining assets in Anhui. CNOOC confirms oilfield development deal in Iraq.[/R]

Stocks in China continued to decline led by property developers and shipping companies extending the bear market plunge. The Shanghai Composite Index crossed the lows reached in August, according to Bespoke Investment Group LLC.

‘The current technicalities suggest that there’s more downside in store for the bear market in China stocks,’ wrote Justin Walters, Bespoke co-founder in a note dated yesterday.

It is unlikely that China will undertake a large one-time appreciation of the yuan if and when it lets the currency float against the dollar, said the former Hong Kong Monetary Authority head, Joseph Yam while speaking in Singapore today.

Yam is the executive vice president of the China Society for Finance, a think tank overseen by China’s central bank.

Guangzhou Automobile Group Co, offered to purchase 62% of the shares it doesn’t own of Denway Motors Ltd for HK$26 billion, as it seeks its own listing by the end of June. Denway Motors Ltd is its Hong Kong-trade affiliate.

The all-stock offer values Denway shares at HK$5.49 per share which is a 20% premium to its closing price on April 28, the last day of trading before trading was suspended.

Guangzhou Auto aims to seek a listing in Hong Kong by the end of June, said Lu Sa, secretary to the board of directors while talking to reporters in Hong Kong today.

Michael Ying, the former chairman of the biggest Hong Kong-listed clothier Esprit Holdings Ltd, sold 1.79% or 22.8 million of his shares in the company for about $160 million, through a company controlled by him. The sale was arranged by UBS AG on March 11 at HK$54.25 per share.

The shares were sold at 6.7% discount to the market price.

China Power Investment Corp, one of China’s five largest electricity producers, is studying plans to build AP 1000 nuclear reactors in southern, central and northeastern China to meet surging energy demand.

The China government is planning to increase the use of alternate fuels to cut pollution and reduce dependence on oil and fossil fuel. The AP reactors use Westinghouse Electric Company’s design to generate power.

Hang Seng index in Hong Kong decreased 365.96 or 1.83% to 19,578.98, and CSI 300 index in China lower 9.17 or 0.33% to 2,762.17.

Shanghai Movers

China Vanke Co., Ltd, the developer, fell 0.9% to 7.27 yuan.

China Petroleum & Chemical Corporation, the refiner, added 2.0% to 8.96 yuan.

China State Construction Engineering Corporation Limited fell 1.0% to 3.63 yuan after the China Construction Second Engineering Bureau won the bid to build Hanguo City Commercial Center, Shenzhen’s third-tallest building, reports Securities Times, citing unnamed sources from the company.

Industrial and Commercial Bank of China Limited, the lender, rose 1.1% to 4.44 yuan.

Nanjing Iron & Steel Co., Ltd climbed 3.2% to 4.12 yuan after the company engaged in the smelting and processing of ferrous metals inked a strategic agreement with Xinwen Mining Group Co Ltd to jointly acquire a 50% stake in a coal mining firm for a total of 211.68 million yuan.

Poly Real Estate Group Co., Ltd, the developer, dropped 0.7% to 10.82 yuan.

HK Movers

CNOOC Limited dropped 3.0% to HK$12.30 after the offshore oil explorer confirmed it has clinched a deal to develop the Missan oilfields in southern Iraq, state media reported on Tuesday.

Denway Motors Limited plunged 14.2% to HK$3.85.

Esprit Holdings Limited declined 4.6% to HK$45.25.

HSBC Holdings plc dropped 1.8% to HK$72.05.

SJM Holdings Limited the casino operator rose 4.9% to HK$5.05.