Shippers, Insurers Lead in China Markets

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

Prospect for increased demand for commodities in China helped the stock markets in China rally for the third day in four, after shipping and resource companies projected better profit outlook.

[R]5:00 PM Hong Kong, China – US and China strategic talk ends with agreements signed on shale gas and safety standards for nuclear reactors. Cosco increase its stake in port operating company. SAIC Motor expects to sell over 1.6 million autos in first-half. Ping An increases control of a mid-sized bank.[/R]

Prospect for increased demand for commodities in China helped the stock markets in China rally for the third day in four, after shipping and resource companies projected better profit outlook.

Yesterday in London trading, The Baltic Dry Index, a measure of shipping rates for commodities, surged 6.2% to its highest level since Nov 25.

Hong Kong stocks also advanced and rebounded from a 10-month low, after shipping companies gained on higher freight charges and on optimism mainland insurers will be allowed to invest more in Hong Kong shares. Chinese insurers are currently allowed to invest only in the H-shares and red chips of Hong Kong.

Hang Seng index in Hong Kong increased 210.95 or 1.11% to 19,196.45 and CSI 300 index in China was nearly unchanged to 2,813.94.

As the strategic talks between China and US ended in Beijing, the two countries signed several far reaching agreements such as shale gas development and safety standards in China for nuclear reactors. China also agreed to open stock futures trading to foreign investors with Chinese licenses.

The talks veered away from bilateral issues like yuan float timing and US trade deficit, to cover recent developments in the euro-zone and rising tensions in the Korean peninsula.

China will allow qualified foreign institutional investors to invest in the country’s stock-index futures, the US Treasury Department said in Beijing yesterday after the end of the US-China Strategic & Economic Dialog in Beijing.

China and India Water Scarcity

Water scarcity is expected to become the next big issue of the world, as inadequate water in China and India begins to hamper growth in these two fast growing economies. Water scarcity and pollution reduce China’s GDP by about 2.3% every year, the World Bank said in a report in 2007.

Demand for water in the next two decades will double in India to 1.5 trillion cubic meters and increase 32% in China to 818 million cubic meters, according to the 2030 Water Resources Group, the research collaboration between the World Bank, management consulting firm McKinsey & Co, and industrial water users such as Coca-Cola.

Dynasty Fine Wine Seek Targets

‘As there are only a few locations for vineyards in China, we are looking for acquisitions in Australia, New Zealand, Chile or France’, said Chairman Bai Zhisheng of Dynasty Fine Wines Group Ltd, in an interview yesterday in Hong Kong.

The Tianjin, China-based company, wants to raise production to 100,000 tons per year within three years from the current 70,000 tons to meet rising demand in China.

Shanghai Movers

Aluminum Corporation of China Limited rose 0.1% to 10.23 yuan.

Bank of China Limited increased 0.2% to 3.92 yuan.

China COSCO Holdings Company Limited added 1.9% to 10.21 yuan after the shipping company said that its subsidiary COSCO Pacific and Crestway, a wholly-owned subsidiary of Cosco Pacific, jointly invested $520 million to acquire a 13.7% stake in Sigma, the parent company of Shenzhen Yantian Port Holdings according to Securities Daily, citing a company filing.

Henan Yuguang Gold & Lead Co., Ltd closed unchanged at 16.38 yuan.

Jiangsu Expressway Company Limited rose 0.2% to 7.08 yuan after the toll-road operator announced that it will distribute 0.31 yuan per share (pre-tax) in cash dividend on June 9 to shareholders of record on May 31 for the fiscal year ended December 2009.

SAIC Motor Corporation Limited fell 1.3% to 17.22 yuan and 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.

Shanghai International Port (Group) Co., Ltd fell 1.1% to 4.49 yuan.

HK Movers

China Life Insurance Company Limited rose 0.6% to HK$32.75.

China Shipping Container Lines Company Limited added 1.6% to HK$2.48.

GOME Electrical Appliances Holdings Ltd surged 10.6% to HK$2.16.

Pacific Basin Shipping Limited rose 2.6% to HK$5.01.

Ping An Insurance (Group) Company of China, Ltd added 4.5% to HK$60.35 after the company announced a management reshuffle Wednesday, with seven executives from the company taking seats on the mid-sized lender''s board after the insurer raised its stake earlier this month.