Property Worries Hover China Sentiment

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
04 Jun, 2010
New York City

Baoshan Iron & Steel Co, China

[R]5:00 PM Hong Kong, China – Stocks in Shanghai closed higher but in Hong Kong traded lower. World Bank estimated economic growth in China to cool in the rest of the year and range between 9% and 10%. Baoshan Iron & Steel to cut prices in July. Foxconn Line Workers in China get 30% pay increase after a series of suicides.[/R]

China stocks gained marginally aided by property stock’s rebound. The CSI 300 added 0.3% or 8.32 to 2744.39.

Stocks in Hong Kong declined after metal prices dropped, sending the Hang Seng Index to its fourth decline in five days. The index lost less than 0.1% or 6.64 points to close at 19,780.07.

The London Metals Index, which tracks the prices of copper, aluminum, lead, tin, zinc and nickel, dropped 2.3% yesterday, after China liquidates inventory.

China’s economy will expand between 9% and 10% in 2010, after it overheated in the first quarter, said, World Bank’s chief economist, Justin Lin.

“Growth in the first quarter at 11.9% was a little overheated and so it would be for the good of the nation, if the economy slows a little,” Lin said in an interview in Busan, South Korea today.

Economic expansion may ease this year compared to 2009, but the country will see stable and relatively fast growth for the year, said the National Development & Reforms Commission in response to a report in the Economic Information Daily wherein an economist had forecast that inflation could accelerate to 7% as against the upper target of 3% set by the government.

The time has not yet come for China to withdraw or reduce support for real estate industry growth, said Li Fuan, an official with the China Banking Regulatory Commission, while addressing a forum in Beijing yesterday.

“Real Estate Industry is far from being at the end of its development and will continue to be one that supports the nation’s economic growth for another 30 or even 40 years. The real estate industry will need another 60 or more years of support in its development before living standards can be brought to a well off and harmonious level,” he said at the forum.

Hong Kong’s air pollution index reached a very high reading of 106 at 7 a.m. local time in the Central roadside station, according the website of the city’s Environmental Protection Department. Any reading over 100 triggers a government warning for people with heart or respiratory ailments to avoid heavy traffic areas in the city.

Baoshan Iron & Steel Co, China’s biggest publicly traded steelmaker, cur prices for July delivery amidst concern government curbs on construction may trim demand from builders.

Hot-rolled coil prices were reduced by 300 yuan to 500 yuan a ton and automotive cold-rolled prices by 500 yuan to 1000 yuan, the Shanghai-based mill said in its website, making it the first price reduction since November last year.

Shanghai Movers

Baoshan Iron & Steel Co., Ltd fell 1.1% to 6.21 yuan after the steelmaker plans to cut the prices of its products by 10% to 17% month-on-month in July, reports China Securities Journal.

China Vanke Co., Ltd, the developer, added 1.2% to 7.28 yuan.

China Merchants Bank Co., Ltd, the lender, rose 0.2% to 13.18 yuan.

China State Construction Engineering Corporation Limited fell 0.2% to 3.55 yuan after the housing contractor said its subsidiaries won a total of 10.66 billion yuan worth of contracts accounting for 4.1% of the company’s revenue in 2009, reports China Securities Journal, citing a company filing.

Industrial Bank Co., Ltd fell 1.5% to 24.15 yuan after the lender backed by a HSBC Holdings Plc unit said 992.45 million shares will become tradable on June 8 after a rights offer June 2.

[HK Movers

CITIC Resources Holdings Ltd fell 1.3% to HK$1.43.

Esprit Holdings Limited fell 0.9% to HK$43.95 after the clothier was upgraded to “buy” from “neutral” at UBS AG.

Foxconn International Holdings Limited closed unchanged at HK$5.95 after the contract maker of mobile-phones said Wednesday it has given its production line workers in China a 30% pay increase.

Harbin Power Equipment Company Limited closed unchanged at HK$5.64 after the company said its shareholders voted to reject a proposed financial services framework agreement.

TPV Technology Limited the contract manufacturer of computer monitors rose 0.8% to HK$4.90.