China Regulators Defend Stress Test; Sina Up

Chandrasekhar Atreya
06 Aug, 2010
New York City

Stocks in China region after regulators clarified the purpose of bank stress test. House price index drops for second month in Shanghai. Shanghai Volkswagen reports robust sales in July. Sina Corp posts better-than-expected second quarter profit.

[R]5:00 PM Hong Kong, China – Stocks in China region after regulators clarified the purpose of bank stress test. House price index drops for second month in Shanghai. Shanghai Volkswagen reports robust sales in July. Sina Corp posts better-than-expected second quarter profit.[/R]

Shanghai stock market closed slightly higher in the morning session as gains in small caps more than offset losses of blue chips. The gains in the afternoon session helped the benchmark index to close higher for the third week after concern about stress tests on banks eased.

Stocks in Hong Kong started lower but gained through the day to finish higher as traders welcomed an announcement from mainland bank regulators that stress tests for lenders would not indicate a change in property policy.

The Hang Seng Index in Hong Kong gained 0.59% or 127.08 to close at 21,678.80. The CSI 300 Index in China gained 1.64% or 46.83 to close at 2,897.66.

China’s Ministry of Commerce said the sales value of household appliances in rural areas increased 82% from a year ago to 1.6 billion yuan in July.

Inventory of new homes for sale totaled 106.46 million square meters in June, an increase of 0.2% from a year ago, according to the National Bureau of Statistics. Houses built for relocated residents under urban redevelopment plans were excluded said the bureau which tracked a total of 80,522 real estate developers across the country.

China’s banking regulator said scenarios used by lenders in stress tests do not represent its outlook on the property market but is only preparing the market for a probable scenario.

The suggested risk factors aren’t meant to signal likely changes in real-estate lending policies, according to a statement on the China Banking Regulatory Commission’s Web site yesterday.

Taiwan’s financial supervisor plans to allow the island’s insurance companies to invest up to 10% of their overseas quota in the mainland equity market by the end of this month to seek higher investment returns.

The move is expected to channel more than NT$300 billion into stocks, corporate bonds, government debt, initial public offerings, exchange-traded funds and yuan deposits on the mainland.

Shanghai’s house price index fell for the second month in July with 90% of the areas covered recording price drops. The index which tracks price fluctuations of existing homes across the city, lost 14 points or 0.53% to 2,551 last month, the Shanghai Existing House Index office said yesterday.

Sino-German car venture Shanghai Volkswagen said on Thursday sales were up 26.6% to 82,465 units in July despite an industrial slowdown. These robust sales helped Shanghai VW to maintain its position as the best-selling car maker in China.

Online video site Tudou.com announced Thursday it has raised $50 million in its Series E funding to support research and development projects for mobile device video technology to drive future growth. It has received $35 million from Temasek Holdings Pte Ltd and $15 million from existing investors including IDG China and GGV Capital.

“Access through wireless internet to video sites will exceed desktop devices worldwide in the next five years and Tudou aims to provide video content to users wherever they are and whatever kind of devices they use,” said Gary Wang, CEO of the company.

Sina Corp, China’s largest portal operator, posted better-than-expected second quarter profits on surging advertising income. Net income nearly doubled to $25.2 million or $0.38 per share, from $13.3 million in the same period last year, the company said in a statement Thursday.

Shanghai Movers

Industrial & Commercial Bank of China Ltd, China’s biggest listed lender, gained 0.7% to close at 4.26 yuan and China Construction Bank, the nation’s second-largest lender, climbed 0.8% to 4.87 yuan.

Bank of Communications, part-owned by HSBC Holdings Ltd, rose 2.5% to 6.54 yuan.

Poly Real Estate Group Co added 1.3% to 12.66 yuan, rebounding from loss of 1.4% yesterday and Gemdale Corp added 0.6% to 6.93 yuan.

Sany Heavy Industry Co gained 5% to 23.51 yuan after the company said it expects net income to increase at least 150% from a year earlier.

Western Mining Co climbed 3.4% to 11.35 yuan.