China Indexes Rally; HK Auctions Third Plot

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

Stocks in China fluctuated but closed higher led by gains in consumer and technology companies pushing the benchmark index up from a 13-month low. Hong Kong stocks also rose after a report showing German factory orders rose in April.

[R]5:00 PM Hong Kong, China - Shenhua Energy completes construction of Coal-to-Olefins project. Datong Coal Industry Co., Ltd plans to transfer a minority stake in Inner Mongolia based resource company. Hong Kong sells a residential plot in an auction at better than expected price.[/R]

Stocks in China fluctuated but closed higher led by gains in consumer and technology companies pushing the benchmark index up from a 13-month low. Hong Kong stocks also rose after a report showing German factory orders rose in April.

Hang Seng index in Hong Kong increased 109.33 or 0.56% to 19,487.48 and CSI 300 index in China closed higher 3.62 or 0.13% to 2,699.34.

China’s economic growth is expected to range from 10% to 11% this quarter as industrial production and investment expand at a slower pace, according to a researcher for the country’s cabinet.

“The 11.9% expansion in the first quarter will not be sustained as the outlook for export growth and investment is uncertain,” said Zhang Liqun, a researcher at the State Council’s Development and Research Center on the sidelines of an economic forum in Beijing yesterday.

China, the most ‘overbought’ market in Asia, had its stocks along with Hong Kong’s cut to “neutral” from “overweight’ by Bank of America Merrill Lynch Global Research.

“China’s yield curve has narrowed sharply to 102 basis points in 160 basis points in mid-April and growth expectations will continue to fall,” strategists led by Sadiq Currimbhoy said in their report yesterday.

They upgraded South Korea and India to “neutral” and Singapore to “overweight.”

Cathay Pacific Airways Ltd, Hong Kong’s biggest carrier said yesterday it has agreed to sell 15% of its stake in Hong Kong Aircraft Engineering Co to its biggest stakeholder for HK$9.4 billion. The proceeds will be used for paying for 33 planes to be delivered in the next four years to the carrier.

“We are talking to Boeing Co about 787s and Airbus SAS about A350s, as these smaller long-range jets are more suited to carrying cargo,” said the company’s CEO Tony Tyler in an interview in Berlin. The carrier is seeking to enhance its cargo business long-term.

In a move to garner more funds, Guangzhou Automobile Group Co has made a revised offer to acquire the shares of Denway Motors Ltd, it doesn’t already own. The company is offering 0.474026 of its shares for each share of Denway, it said in a Hong Kong Exchange filing today.

The auto maker values the offer of HK$ 51.6 billion as 25% higher than its earlier offer made on May 19. The auto maker has been seeking a public listing since 2008 and has a target date for listing its shares by the end of July.

The government in Hong Kong sold in a public auction today a residential site in Ho Man Tin district for HK$10.9 billion. The winning bid was made by Sun Hung Kai Properties Ltd as reported by Cable TV.

Shanghai Movers

Anhui BBCA Biochemical Co., Ltd fell 2.7% to 7.40 yuan.

China Shenhua Energy Company Limited fell 0.6% to 22.92 yuan after the coal producer completed the construction of the world''s largest coal-to-olefins project in Baotou city, Inner Mongolia, reports Peoples’ Daily.

China Coal Energy Company Limited fell 0.3% to 9.10 yuan.

China Minsheng Banking Corp., Ltd dropped 0.1% to 6.06 yuan after the bank said Friday it will sell up to 5.8 billion yuan ($849.4 million) worth of 10-year subordinated bonds on the interbank market Thursday to replenish its capital. Haitong Securities Co. is the main underwriter of the deal, Minsheng Bank said.

China Gezhouba Group Company Limited rose 1.1% to 10.97 yuan after the company announced that it won a bid from Dams Implementation Unit of Sudan to undertake Sherik Hydropower Project, at $711,133,454.69.

DaTong Coal Industry Co., Ltd fell 0.09% to 32.08 yuan after the coal company announced that it plans to transfer 19% stake in an Inner Mongolia-based coal-investment company to a Zhejiang-based energy group company.

SAIC Motor Corporation Limited rose 1.0% to 12.41 yuan after the carmaker said on Monday it sold 26.1% more vehicles in May than a year earlier, although the rate of growth is slowing.

Tsingtao Brewery Co., Ltd rose 1.1% to 36.00 yuan.

[HK Movers

Denway Motors Limited rose 1.9% to HK$3.61.

Great Wall Motor Company Limited fell 2.5% to HK$12.14 after the maker of pick-up trucks was upgraded to “overweight” from “equal weight” by Morgan Stanley.

Hong Kong Aircraft Engineering Company Limited surged 24.0% to HK$104.20.

Swire Pacific Limited fell 1.9% to HK$83.85 after the company said it plans to offer to buy the 54% in affiliate Hong Kong Aircraft Engineering Co. it doesn''t already own, including shares held by Cathay Pacific Airways Ltd., in a deal that could be valued at up to $1.21 billion.