Revised Outlook Drags China, Asia Markets

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

The benchmark indexes in Shanghai dropped to 14-month low after a private researcher lowered economic outlook. The news lowered indexes across Asia. ICBC posts 39% drop in new loan growth. Datang Power Changes sponsor for private placement.

[R]5:00 PM Hong Kong, China – The benchmark indexes in Shanghai dropped to 14-month low after a private researcher lowered economic outlook. The news lowered indexes across Asia. ICBC posts 39% drop in new loan growth. Datang Power Changes sponsor for private placement. CITIC Bank and BBVA plan to set up independent private banking unit.[/R]

Stocks in China traded lower for a fifth straight session on Tuesday, plunging to a 14-month low as stocks fell across a broad spectrum of sectors including gold producers, property shares and banks. The revised economic outlook by a private research organization sparked the sell-off.

The benchmark Shanghai Composite Index, which tracks both A and B shares, ended 4.27% down or 108.23 to close at 2,427.05.

The CSI 300 Index, which tracks stocks in the Shanghai and Shenzhen markets fell 4.59% or 124.76 to close at 2,592.02 today.

The Hong Kong stocks also fell, the most in five weeks on China economic slowdown worries. The Hang Seng Index fell 2.31% or 477.78 to close at 20,248.90 at the end of today’s trading.

The Conference Board, the research group said leading economic indicators increased only 0.3% in April, much less than the 1.7% gain reported on June 15, and cited calculations errors. The index increased 1.2% in March.

Google Inc, in an effort to avoid losing its license to operate its Web site in China, will change the way users access its site, the company said in a blog post today.

The government in China has made it clear that it will not renew Google’s Internet license should the company continue to automatically redirect users of the Chinese service to its unfiltered site in Hong Kong, the company said in that blog.

Google Inc had in the month of March closed its China search engine and begun directing users to its Hong Kong site. The dispute with the Chinese government had cost the company partnerships with China Unicom (Hong Kong) Ltd and Motorola Inc to operate in the country.

China Resources Enterprise Ltd, the nation’s largest brewer, is taking control of Hong Kong’s second-largest coffee chain, Pacific Coffee Group, a unit of Chevalier Pacific Holdings Ltd, aiming to surpass Starbucks Corp’s reach and spread in the mainland.

The parent company said in its statement today that China Resources will pay HK$326.6 million for 80% stake of Pacific Group, which has 83 outlets in the city.

China and Taiwan signed today a trade agreement in the Chinese city of Chongqing after more than a year of talks and negotiations.

Curbs by China on exports of some raw materials have led to complaints by the European Union, U.S. and Mexico to the WTO, which is probing the matter to ascertain whether these policies give Chinese manufacturers an unfair advantage in trade.

“Tungsten, molybdenum, and vanadium are some of the mineral resources that give China an advantage and as these are non-renewable, we will continue to curb their production and shipments,” said Zhang Fengkui, division head of raw materials at the Ministry of Industry and Information Technology in Beijing today.

Shanghai Movers

China Life Insurance Company Limited dropped 4.1% to 24.17 yuan.

Datang International Power Generational Co., Ltd rose 1.1% to 7.10 yuan after the company replaced CITIC Securities with China Merchant Securities as the sponsor for its private placement, reports yicai.com, citing a company filing.

Industrial and Commercial Bank of China Limited fell 3.2% to 4.12 yuan after the company recorded a 39.2% year-on-year decline in new loan growth for the first half of the year to 525 billion yuan as of June 28, reports Securities Daily, citing director Jiang from the bank''s loan division.

Ping An Insurance (Group) Company of China, Ltd closed unchanged 46.81 yuan after the company and Shenzhen Development Bank Co. plan to sell no more than 379.6 million new shares in a private offering to the life insurance unit of the company. The plan has received China Securities regulatory approval, Ping An said.

HK Movers

China CITIC Bank Corporation Limited fell 4.2% to HK$5.00 after the bank and Spain-based Banco Bilbao Vizcaya Argentaria SA agreed to set up an independent private banking business cooperation unit with investment of about 400 million yuan in total, sources reported.

China Resources Enterprise, Limited dropped 2.4% to HK$28.05 after the company said it will acquire an 80% stake in Pacific Coffee (Holdings) Ltd.

China Southern Airlines Company Limited dropped 4.6% to HK$3.31 after the company said two more China Southern executives have been detained for questioning after seven others were detained on June 9, the China Business News reported.

First Pacific Company Limited fell 0.7% to HK$5.35.