China Stocks Volatile; Agbank HK Debut

Chandrasekhar Atreya
16 Jul, 2010
New York City

Stocks in China region fluctuated. Shanghai proposes gold exchange certificates for mutual funds. Agbank shares fare better in Hong Kong debut. Three officers of Zijin Mining are detained by police following investigations. Sichuan Western Resources permitted to purchase mining rights in Jiangxi.

[R]5:00 PM Hong Kong, China – Stocks in China region fluctuated. Shanghai proposes gold exchange certificates for mutual funds. Agbank shares fare better in Hong Kong debut. Three officers of Zijin Mining are detained by police following investigations. Sichuan Western Resources permitted to purchase mining rights in Jiangxi.[/R]

Most of heavy China stocks gained after dropping in the initial period led by consumer stocks, to end the day marginally lower at most exchanges.

The Hang Seng Index in Hong Kong dropped 0.03% or 5.46 to close at 20,250.16 and the CSI 300 Index in China gained 0.29% or 7.61 to close at 2,616.13.

China government’s commitment to have less dependence on export-led economy may be facing a challenge as the global economy is slowing more than estimated. That however, gives a chance to the government to focus on short-term expansion.

The Shanghai Stock Exchange has submitted a proposal to People’s Bank of China for introduction of a gold exchange certificate developed by the exchange, said Liu Ti, an official with the stock exchange.

“The gold exchange certificates would be traded on the Shanghai exchange,” Liu Director of the exchange’s innovation department, said at a Guosen Securities Co conference in the city of Qingdao today. The certificates, designed for institutional investors such as mutual funds and insurers, would be sponsored by the gold exchange instead of a fund as China prohibits mutual funds from investing in gold.

Standard Chartered Plc, after investing $500 million in the Agricultural Bank’s IPO, now plans to start a cooperation agreement with the Chinese bank by offering advice on capital markets business in Hong Kong.

“We’re planning to initiate the first phase of the agreement in the Hong Kong market,” Jaspal Bindra, CEO of Standard Chartered Asia division said in an interview with Bloomberg TV on July 14.

Shares of Agricultural Bank of China began trading in Hong Kong today, rising 1.9% to HK$3.26 after having a lackluster debut in Shanghai yesterday.

Zijin Mining Group, which agreed to cooperate with the regulator’s investigations, has confirmed that police have detained three of its officers, Secretary Zheng Yuqiang said by phone today.

Zijin illegally channeled polluted waste water into the Ting River, after heavy rain broke the plastic leak-proof barrier in a waste pit, the government said. The detained managers of the plant are Lin Wenxian, head of the plant, deputy head Wang Yong, and environmental head Liu Shengyuan, the county government said.

China has been seeking to develop its bond market as another source of corporate funding after banks in the nation had extended a record 9.59 trillion yuan of loans last year. National Association of Financial Market Institutional Investors or NAFMII was formed by the People’s Bank of China in 2007 to help develop the nation’s over-the-counter financial markets.

“There’s only one type of pay model for China’s rating agencies at the moment wherein they all receive fee from the issuer. This model causes a strong beneficial alliance between the issuer and the rating agencies that cannot avoid influencing the rating agency’s independence,” said NAFMII in its report.

Sichuan Western Resources Holding Co gained 7.2% to 23.19 yuan, after the copper producer’s application to purchase mining rights in Jiangxi province was approved by the authorities.

Metro Land Corp gained 7.1% to 6.46 yuan after the department store operator said its first half profit soared at least six fold to as much as 125 million yuan.

Zijin Mining Group Co dropped 5.4% to 5.22 yuan after police detained three of its officers after starting an investigation into the leak of acidic waste water into a river.

Agricultural Bank of China fell 0.4% after debuting yesterday. Stock gained 2.5% in Hong Kong on its first day of trading.