China Stocks Drop on Auto Sales, Services Data

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
05 Jul, 2010
New York City

Stocks in China and Hong Kong declined after the expansion in the services sector and auto sales growth slowed in June. Anshan Steel buys stake in Jien Nickel. BoC unveils rights issue recapitalization plan. Carlsberg reaches impasse with Chongqing Brewery Co.

[R]5:00 PM Hong Kong, China – Stocks in China and Hong Kong declined after the expansion in the services sector and auto sales growth slowed in June. Anshan Steel buys stake in Jien Nickel. BoC unveils rights issue recapitalization plan. Carlsberg reaches impasse with Chongqing Brewery Co.[/R]

Stocks in China declined driving the benchmark index to a 15-month low after a survey showed the weakest pace of expansion in the services sector in June, since May 2009.

Stocks in Hong Kong fluctuated and fell for the fourth day today completing the benchmark index’s longest losing streak in two months after mainland China concerns of economic slowdown got reflected in market sentiments.

Hang Seng Index in Hong Kong decreased 63.12 or 0.32% to 19,842.20 and CSI 300 index in China ended lower 21.45 or 0.85% to 2,512.65.

A survey of business conditions in China’s services sector in June showed the weakest pace of expansion in 15-months adding to the growing evidence of a broad-based slowdown in the economy. The services purchasing manager’s index for June eased to 55.6 from 56.4 in May, the weakest pace of expansion since May 2009, according to survey results compiled by HSBC and Market Economics.

China’s auto sales also grew at a slower pace in June as compared to May. Passenger-car purchases in June grew at 10.9% from a year earlier, as compared to 25% in May, the China Automotive Technology and Research Center said today.

China had imported 126 million tons of coal from overseas last year in order to meet surging demand from steelmakers and power producers. After the government imposed price caps on local mines, the nation may need to import less to meet the needs.

China may also cut overseas purchases after the discounts on rates from South Africa have narrowed the price difference by 47% this year when compared with domestic suppliers.

The discount on coal from South Africa’s Richards Bay, the world’s second biggest exporting harbor and Chinese supplies has narrowed to $19 a ton before shipping costs are taken into account compared with $36 a ton less than a year ago, government data show.

Home sales in Hong Kong fell to the lowest level in 14 months as it fell to HK$33 billion in June, from HK$42.8 billion in May. The number of residential units changing hands declined to 9,130 from 11,014 units in May, according to the Land Registry’s Web site.

Shanghai Movers

Angang Steel Company Limited fell 1.7% to 7.12 yuan after the steelmaker subscribed to 157 million yuan worth of shares in Jien Nickel Industry''s private placement, reports China Securities Journal, citing an announcement by Jien Nickel.

Bank of China Limited fell 0.8% to 3.37 yuan after the lender plans to raise up to 60 billion yuan through the issue of 27.92 billion rights shares at a rate of 1.1 for every 10 existing shares, comprising 19.56 billion A-share linked rights shares and 8.36 billion Hong Kong-listed rights shares, the lender announced July 2.

China Petroleum & Chemical Corporation fell 0.7% to 7.77 yuan after a refinery official said company will cut daily oil processing volume at its Hainan plant by 11% this month from June as profit shrinks.

China Shenhua Energy Company Limited fell 1.9% to 20.75 yuan after Huaneng Power International, Huadian Power International, China Guodian Corporation, and China Shenhua Energy may participate in a tender for the power assets of Australia''s New South Wales government, reports 163.com, citing informed sources.

Chongqing Brewery Co. Ltd closed unchanged at 32.85 yuan after Danish brewer Carlsberg, met another impasse in its purchase of China''s Chongqing Brewery Company Tuesday.

Hunan Valin Steel Co., Ltd rose 0.7% to 3.90 yuan after Steel Group Co. Ltd. confirmed on Thursday that the joint venture agreement by Valin and ArcelorMittal, had been approved by the National Development and Reform Commission.

Zhongjin Gold Corp., Ltd dropped 2.5% to 45.43 yuan after the gold producer plans to pay cash dividend of 1.5 yuan (pre-tax) for every 10 shares held, according to a company filing.

HK Movers

Country Garden Holdings Company Limited fell 1.4% to HK$2.11 after the developer announced yesterday that its contracted sales surged 50% from a year ago period to 13.2 billion yuan in the first six months of this year.

Yuexiu Property Company Limited fell 1.1% to HK$1.68 after the company emerged as the favorite to buy Tower 42, a London skyscraper, after winning a three-month auction with a £300 million ($456 million) bid, the Financial Times said July 3.