China Stocks Gain; HK Index Declines

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
02 Jun, 2010
New York City

China stocks rise for first time in four days as developers and brokerages gain. Hong Kong stocks fall after Bank of China started its 40 billion yuan convertible bond sale. Fujian Cement plans to buy rights issue of Industrial Bank. Galaxy Entertainment Group first quarter EBITDA rises 79%.

[R]5:00 PM Hong Kong, China - China stocks rise for first time in four days as developers and brokerages gain. Hong Kong stocks fall after Bank of China started its 40 billion yuan convertible bond sale. Fujian Cement plans to buy rights issue of Industrial Bank. Galaxy Entertainment Group first quarter EBITDA rises 79%.[/R]

Stocks in China initially lost but regained in the second session and rose for the first time in four days after developers and brokerages gained.

The SCI fell 1.8% and then recovered to gain 0.1% to reach 2,571.42 at close. The CSI 300 Index advanced 0.49% or 13.36 to close at 2,757.53 today.

Hang Seng index in Hong Kong decreased 25.15 or 0.13% to 19,471.80.

Operations at a parts facility in China were resumed by Honda Motor Co as most workers ended a walkout that led to the shut down of all of the company’s production in China last week.

The factory resumed operations even as the company continues to negotiate with some workers, said Takayuki Fujii, a Beijing-based spokesman of the company. The other four plants which were shut down will remain shut at least till tomorrow he said.

Hon Hai Group also known as Foxconn Technology Group, the assembler of Apple Inc’s iPhones, will raise workers salaries at Shenzhen, at least by 30% to avoid negative publicity after a series of suicides have become a source of worry.

“It has been a while since we revised wages, hence this decision,” Edmund Ding a spokesman at the Taipei-based flagship company Hon Hai Precision Industry Co, said over phone today.

Meanwhile CEO Steve Jobs of Apple Inc said his company is “all over” Foxconn Technology Group to end the spate of suicides at the contract manufacturer’s site in Shenzhen.

It is very troubling and Foxconn is not a sweatshop, Job said yesterday during an interview at a technology conference in California.

The Federation of Logistics and Purchasing said in Beijing yesterday that average factory employment index for the past three months reached 52.7 even as its measure for manufacturing growth slid.

This situation is ripe for upward wage revision in China factories as seven Chinese provinces have lifted the freeze on minimum wage increases put into effect after the global recession.. Faster job growth and higher wages could help the government to rebalance the economy away from export dependence.

Shanghai Movers

Bank of China Limited declined 5.1% to 3.89 yuan after the lender started to sell 40 billion yuan ($5.9 billion) of convertible bonds to replenish capital.

Industrial Bank Co., Ltd decreased 5.7% to 24.86 yuan after Fujian Cement Inc announced on Friday that it plans to spend 115 million yuan to buy the rights issue of Industrial Bank Co Ltd.

SAIC Motor Corporation Limited added 1.7% to 16.51 yuan after the company announced that it will pay cash dividend of 0.50 yuan per 10 shares (before tax) and use the additional paid-in capital to distribute three new shares for every 10 shares to shareholders on books as of June 7, 2010.

[HK Movers

Brilliance China Automotive Holdings Limited fell 1.2% to HK$2.39.

First Pacific Company Limited rose 1.9% to HK$5.19 after the company with investments in telecommunications and infrastructure in Asia, today approved a two-year program to buy back up to $130 million of shares in the company by way of ""on-market repurchases.""

Foxconn International Holdings Limited dropped 1.5% to HK$5.76 after the Hon Hai Precision Industry plans to raise the production workers'' wages by 30% at its Foxconn International Holdings manufacturing hub in southern China, more than originally planned, a spokesman said.

Galaxy Entertainment Group Limited added 2.2% to HK$3.70 after the casino operator said its first-quarter earnings before interest, taxes, depreciation and amortization rose 79%, driven by better gaming volumes and cost controls at its StarWorld casino and hotel.

Guangzhou R&F Properties Co., Ltd, the real estate company, rose 0.8% to HK$9.52.