Shanghai Falls; Everbright Wins IPO Approval

Chandrasekhar Atreya
27 Jul, 2010
New York City

Stocks in China fell for the first time in seven days on report that banks may suffer losses in infrastructure loans. Zijing trading remains suspended for the second day. Everbright Bank gets approval for IPO. Weekly sales of homes in Shanghai surges 44%.

[R]5:00 PM Hong Kong, China – Stocks in China fell for the first time in seven days on report that banks may suffer losses in infrastructure loans. Zijing trading remains suspended for the second day. Everbright Bank gets approval for IPO. Weekly sales of homes in Shanghai surges 44%.][/R]

Stocks in China fell for the first time in seven days led by banks after a report indicated that lenders may not be able to recoup a significant portion of their loans given for infrastructure projects.

Stocks in Hong Kong rose at the end of the day’s trading after falling in the afternoon.

Hang Seng Index in Hong Kong gained 0.64% or 133.48 points to close at 20,973.39. The CSI 300 Index in China fell 0.55% or 15.33 to close at 2,795.72.

China will open its market further to foreign investors, Commerce Minister Chen Deming wrote in an article published in the Financial Times yesterday. The remarks were another reassurance for foreign investors after Premier Wen Jiabao promised a stable climate for foreign investment in China a few days ago.

Chen said China remained a top destination for investment by multinational companies. When globally foreign direct investment fell nearly 40% in 2009, investment into China fell only 2.6%, he said in the article.

People’s Bank of China sold one-year bills worth 23 billion yuan at a yield of 2.0929% in an auction today, according to traders at China Citic Banking Corp and Industrial and Commercial Bank of China Ltd.

Zijin Mining Group Co’s shares trading suspension has been extended by another day at Shanghai and Hong Kong pending a price-sensitive announcement.

Everbright Bank gained regulatory approval yesterday for its IPO in Shanghai. The Beijing-based bank will sell up to 6.1 billion shares in the offering, according to China Securities Regulatory Commission.

The bank is selling 15.4% of its enlarged capital in the offering before over allotment and can expand the sale to as many as 7 billion shares after exercising the over-allotment option.

Weekly sales of new homes in Shanghai rose to the highest in three months while the average price stayed below 20,000 yuan per square meter barrier for the seventh consecutive week.

Sale of new homes, excluding those designated for relocated residents under urban redevelopment plans, jumped 44% to 115,000 square meters last week, the highest weekly volume since April 26, Shanghai Uwin Real Estate Information Services Co said yesterday.

Growth in electricity demand may drop 5% in the second half of this year from a year ago due to a higher base of comparison, energy conservation measures and moderated economic growth, the China Electricity Council said yesterday.

Banks in Shanghai face more risk exposure from the real estate sector as developers are struggling to pay loans due to tighter controls in housing policy, the local banking regulator said.

“Attentive loans, which may turn into bad loans, but have yet to sour, rose among development loans since April,” the Shanghai Bureau of the China Banking Regulatory Commission said in a statement yesterday.

Hong Kong government is proposing to sell a building site in the Peak district in an auction tomorrow, as demand for high-end properties in the city remains high. Market expects the auction to fetch rates ranging from HK$27,000 to HK$35,000 per square foot in terms of gross floor area.

“A better-than-expected result at this auction will have a huge impact on buyer sentiment. The auction should fetch anything between HK$28,000 and HK$30,000 a square foot and any rate beyond that will give the luxury property market a big boost,” said Ricky Poon, a Hong Kong-based Executive Director of residential sales at Colliers International Ltd.