Stocks Lower in Shanghai, HK

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

Stocks in China and Hong Kong China closed lower in a volatile trading. Wuhan Iron signs a deal with Riversdale of Australia to develop a coking coal mine in Mozambique. China Merchants Bank prepared for 30% drop in home prices. Total SA and PetroChina may jointly develop Sulige Gasfield.

[R]5:00 PM Hong Kong, China – Stocks in China and Hong Kong China closed lower in a volatile trading. Wuhan Iron signs a deal with Riversdale of Australia to develop a coking coal mine in Mozambique. China Merchants Bank prepared for 30% drop in home prices. Total SA and PetroChina may jointly develop Sulige Gasfield.[/R]

China stocks rose today led by finance and broadcasting companies but closed lower. Banks had dropped earlier in the day after a report said that state revenues were not enough to pay off their debts.

Most stocks in Hong Kong also gained today in the first session, led by resource companies after new Prime Minister Julia Gillard said she would negotiate with the mining industry over the proposed 40% resource profit tax. However the index closed lower at the end of the day.

Hang Seng index in Hong Kong decreased 123.12 or 0.59% to 20,733.49 and CSI 300 index in China closed lower 1.00 or 0.04% to 2,757.50.

The China Securities Journal citing the country’s Auditor General Liu Jiayi said that debts owned by seven provinces, 10 cities and 14 districts exceeded their repayment abilities by more than 100%. The total amount of these debts was 2.9 trillion yuan according to this report.

China’s insurance premiums increased 36% in the first five months of this year to 673.7 billion yuan, Shi Hong, Deputy Director of China Insurance Regulatory Commission, said yesterday in Shanghai.

Wuhan Iron and Steel Corp have signed an initial agreement with Riversdale Mining Ltd of Australia to develop a coking coal mine in Mozambique’s Tete province. The initial deal for $800 million allows 40% stake for Wuhan in the project.

“Through our Chinese venture partners, including a logistics accord with China Communications Construction Co, we gain funding to develop the mine and also a buyer for part of the production. We also gain access to world class mine to ship logistics and infrastructure expertise to facilitate the export of the mine’s coal products,” said Riversdale Executive Chairman Michael O’Keeffe in Sydney today.

Nissan Motor Co’s production at its China unit in Guangzhou was disrupted by a strike for two hours yesterday because of a strike at its parts plant. The strike which began on June 22 did not affect production till yesterday for two hours, and has since ended according to the company’s spokesman Akihiro Nakanishi.

“Given China’s rapid economic growth, the possibility that a problem like this would occur was well within our expectations,” said Satoshi Ozawa, an Executive Vice President of Toyota at the company’s annual shareholder meeting today in Tokyo.

Shanghai Movers

China Life Insurance Company Limited added 1.1% to 24.86 yuan after the insurer floated 12.45 billion yuan of premiums from its personal life insurance business in May, according to a report by the Shanghai Securities News.

China Merchants Bank Co., Ltd dropped 0.2% to 13.29 yuan after the bank said it will be able to cope with a 30% decline in home prices due to the low proportion of mortgage loans in its total loan balance, reports yicai.com, citing Ma Weihua, President of the bank.

China COSCO Holdings Company Limited, the container line, closed unchanged at 9.55 yuan.

PetroChina Company Limited fell 0.09% to 10.76 yuan after the French oil and gas explorer Total SA expects to create a joint venture with the company to develop the Sulige Gasfield in Inner Mongolia autonomous Region.

Ping An Insurance (Group) Company of China, Ltd rose 0.9% to 47.19 yuan.

[HK Movers

HSBC Holdings plc fell 1.2% to HK$75.45 after the Chief Executive Michael Geoghegan reiterated Wednesday that the U.K. lender is ready for a listing in mainland China once the country''s regulators allow foreign companies to domestic listing.

Standard Chartered PLC fell 0.9% to HK$203.40.