China Stocks Rally on Strong Earnings

Chandrasekhar Atreya
28 Jul, 2010
New York City

Stocks in China rallied on better than expected earning of industrial enterprises in 24 regions across the nation. Investment in equities rises in the second quarter by 32%. Swire Pacific abandons plan to acquire Haeco. Chalco suspended trading of shares till July 30.

[R]5:00 PM Hong Kong, China – Stocks in China rallied on better than expected earning of industrial enterprises in 24 regions across the nation. Investment in equities rises in the second quarter by 32%. Swire Pacific abandons plan to acquire Haeco. Chalco suspended trading of shares till July 30.][/R]

The benchmark index opened sharply higher by 1% in the morning and closed up more than 2% after airlines and property shares rebounded. The index surged more than 11% from the low of the year. Stocks in Hong Kong gained after crossing the resistance point of 21,000.

The Hang Seng Index in Hong Kong gained 0.56% or 117.79 to close at 21,091.18. The CSI 300 Index in China gained 2.43% or 68 to close at 2,863.72.

The central bank said in its report for the second quarter posted on its Web site that the economic fundamentals are good and the decreasing dependence on exports means the European debt crisis is unlikely to have a large impact.

Investments in China’s equity market totaled $2.16 billion in the second quarter, rising 32% from a quarter earlier, an industry report said.

The funds increased investment in 211 companies in the period compared to 159 in the first quarter, the Zero2IPO Research Center said in its report today. The report also said investments in yuan-dominated funds hit a quarterly high since 2007.

Profits at China’s industrial enterprises climbed 71.8% year-on-year to hit 1.61 trillion yuan in the first six months of the year, the National Bureau of Statistics said today. However the growth in June was 11.2% lower than in the first five months of the year, the statement said.

Shanghai is expected to see it economy expand by about 10%, faster than the 8% targeted at the beginning of the year, said Mayor Han Zheng yesterday. The city’s GDP expanded by 12.7% in the first half, after spiking 15% in the first three months, Han told deputies to the city’s People’s congress yesterday.

China Merchants Property Development Co, one of the country’s four major publicly listed developers said yesterday that its net profit more than doubled in the first half of the year due to a significant increase in property sales in the period compared to a year ago period.

Net income during the six-month period jumped 116% to 1.05 billion yuan or 0.61 yuan per share, while revenue soared 143% to 6.98 billion yuan, the company said in a statement to the Shenzhen Stock Exchange.

Swire Pacific Ltd scrapped its plans to buy out Hong Kong Aircraft Engineering Co after failing to get shareholder approval. Only 15% of stockholders of Haeco accepted the offer making a total of 76% with Swire’s portion, short of the 90% that allows for the compulsory acquisition of outstanding shares, the company said in a statement to the Hong Kong Stock Exchange today.

Aluminum Corporation of China Ltd, the nation’s biggest producer of the metal, suspended trading of its shares pending an important announcement. The shares of the company will start trading in Hong Kong and Shanghai on July 30, the company said in its statement.

Shanghai Movers

China Eastern gained 5.6% to 8.14 yuan, after being rated higher at “equal weight” from “underweight” by Morgan Stanley.

China Southern Airlines Co, the nation’s largest carrier by fleet size, rose 4.1% to 7.37 yuan.

Baoshan Steel, the listed unit of China’s second-largest steelmaker, gained 2.9% to 6.41 yuan.

China CSSC Holdings Ltd, a unit of China’s largest shipbuilder, gained 2.1% to 59.36 yuan.