China Indexes Plunge on Global Worries

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

Stocks in China fell again after concern that property tax in Shanghai could stoke curbs even as European debt crisis worry continued to persist.

[R]5:30 PM Hong Kong, China – Markets in China dropped on the rising tension in the Korean peninsula and the IMF warning for Spain. Cathay Pacific builds its own terminal in Hong Kong. Yuguang Gold & Lead plans rights issue. Datang Power and its subsidiary plan to develop a coal mine. Bank of China wins an approval to issue 40 billion yuan in convertible bonds.[/R]

Stocks in China fell again after concern that property tax in Shanghai could stoke curbs even as European debt crisis worry continued to persist.

The Shanghai Composite Index dropped 1.9% or 50.79 to close at 2,622.63 and the CSI 300 Index declined 2.1% to 2,813.94. Hang Seng index in Hong Kong decreased 682.26 or 3.47% to 18,985.50.

Shanghai will introduce a property tax policy on a trial basis from next month, the Economic Observer noted.

Microsoft Corp is more optimistic about India and Indonesia as a market than China because of China’s lack of progress in rooting out software piracy, CEO Steve Ballmer said in an interview in Hanoi yesterday.

‘India is not perfect but the intellectual property protection there is far better than in China and so China is a less interesting market to us than either India or Indonesia’, he said in the interview.

Prudential Plc fell on its debut in Hong Kong today and was trading at HK$57.20 at 4:00 p.m., 4.2% lower than the London closing price yesterday.

China has the world’s largest currency reserves which it has built by selling its currency to maintain a two-year peg of yuan against the dollar, buying treasuries in the process.

‘I don’t worry about the fact that it is China holding the largest amount of US treasuries. I worry that the United States has too big a deficit, Hilary Clinton, the US Secretary of State said in an interview on China Central Television.

Hilary Clinton along with Timothy Geithner, are leading the delegation attending the two-day strategic talks in Beijing which began yesterday.

Swire Pacific Ltd, Cathay Pacific Airways Ltd and Citic Pacific Ltd will sell their stakes in the Hong Kong Air Cargo Terminals Ltd to build on their own facilities. Swire will sell its entire 20% stake while the other two will sell about 10% stake each. Cathay expects to open its own terminal in Hong Kong for HK$5.5 billion in 2013.

‘The new terminal represents a significant investment in Hong Kong’, said Christopher Pratt, Chairman of Swire Pacific and Cathay Pacific in an e-mailed statement today.

Honda Motor Co of Japan will raise production capacity by 28% in China to 830,000 vehicles per year by the second-half of 2012, said, CEO Takanobu Ito in Guangzhou today.

Honda has three car factories in China and is preparing to open another in Wuhan in the second-half of 2012 with Dongfeng Motor Group Co.

Copper demand is expected to grow as much as 12% in China helped by consumption which is still strong, according to Wanxiang Resources Co’s Chief Analyst, Sheng Weimin.

Shanghai Movers

Aluminum Corporation of China Limited fell 1.9% to 10.22 yuan.

Bank of Communications Co., Ltd dropped 3.7% to 6.70 yuan after the securities regulator said on Monday that it would review on Friday a rights issue plan.

Bank of China Limited fell 2.4% to 3.91 yuan after the lender announced today that it has obtained approval from the China Securities Regulatory Commission to issue up to 40 billion yuan in bonds convertible into Shanghai-listed A shares.

China CITIC Bank Corporation Limited dropped 3.2% to 5.41 yuan after the investment company said it has obtained approval from the China Banking Regulatory Commission and the People''s Bank of China to sell up to 16.5 billion yuan worth of subordinated bonds, to boost its capital to meet regulatory requirements.

Datang International Power Generational Co., Ltd dropped 4.0% to 7.05 yuan after the publicly traded electricity producer signed an agreement with Datang Coal Industry to jointly build and explore Shengli Coal Field''s Tiandong No.2 Mine, reports 21st Century Business Herald, citing a company filing.

Henan Yuguang Gold & Lead Co., Ltd rose 0.5% to 16.38 yuan after the state-owned assets supervision and administration commission of Henan province approved a plan by the company to conduct a rights issue, according to a company filing.

Jiangsu Expressway Company Limited, the toll-road operator, rose 0.1% to 7.06 yuan.

SAIC Motor Corporation Limited closed unchanged 17.46 yuan after the company expects to sell more than 1.6 million automobiles in the first half of the year, its president Chen Hong said on Tuesday.

HK Movers

BOC Hong Kong (Holdings) Limited, the lender, fell 1.1% to HK$16.56.

International Elite Ltd surged 10.0% to HK$1.10 after the customer relationship outsourcing service provider said it agreed to acquire Sunward for HK$2 billion. International Elite, whose shares have been suspended since May 5, resumes trading today.