China Trade Surplus Soars; Stocks Tumble

Chandrasekhar Atreya
10 Aug, 2010
New York City

Stocks in China region tumbled on liquidity concerns, property prices grew at a slower pace ad July trade surplus and exports surged. West China Cement to seek IPO in Hong Kong after delisting from London.

[R]5:00 PM Hong Kong, China – Stocks in China region tumbled on liquidity concerns, property prices grew at a slower pace ad July trade surplus and exports surged. West China Cement to seek IPO in Hong Kong after delisting from London.[/R]

Stocks in Shanghai fell as China Everbright Bank began its subscription process for its public offering today. Investors feared that the IPO may lower liquidity in the market.

Stocks in Hong Kong also fell on mainland worries as developers declined after property prices rose at the slowest pace in six months. The benchmark index traded steadily lower in the session.

The Hang Seng Index in Hong Kong dropped 1.5% or 327.99 to close at 21,473.60. The CSI 300 Index in China dropped as much as 2.93% or 85.60 to close at 2,832.64.

China’s trade surplus surged to an 18-month high as exports surged while gains in imports slowed.

Exports in July increased 38.1% to $145.5 billion while imports advanced 22.7% to $116.8 billion. The gap surged 170% from a year earlier to $28.7 billion, the Customs Bureau said on its Web site today.

Net crude purchased and imported fell to 18.8 million tons in July from an all-time high of 22.1 million tons in June, according to preliminary data released today by the General Administration of Customs in Beijing.

July property prices in China rose at a slower pace of 10.3% as the government cracked down on speculation to prevent property bubbles. Prices in 70 major cities rose 10.3% from a year earlier, at the slowest pace in six months, the statistics bureau newspaper China Information News said today in its report.

Passenger car sales to dealers in China increased at the slowest pace of 13.6% in July since March 2009, as lower demand hampered sales.

Wholesale deliveries of passenger cars rose to 946,200 in July, compared to 19% in June, the China Association of Automobile Manufacturers said today in a statement. In July 2009, sales soared 70.5% as the government offered incentives to boost car purchases.

Beijing-based China Everbright Bank Co can raise as much as 18.91 billion yuan in the country’s second-largest IPO this year.

The bank will sell as many as 6.1 billion shares before exercising an over-allotment option at 2.85 yuan to 3.1 yuan a share, according to a statement made to the Shanghai Stock Exchange.

West China Cement Ltd is seeking HK$1.39 billion from its IPO offering in Hong Kong after delisting from London to seek a better valuation for its stock.

“The British don’t really understand China. Our stock has been severely undervalued in U.K. and I believe more such enterprises will follow suit in the near future,” said Zhang Jimin, Chairman and CEO of the Shaanxi, China-based cement maker, said at a press conference in Hong Kong on Monday.

China Media Capital, the nation’s first private equity fund focusing on investment in the media industry, is to acquire a, controlling stake in three Chinese TV channels and movie library content from News Corp, the fund said yesterday.

The two parties will co-develop Xing Kong, Xing Kong International, Channel [V]’s Chinese mainland operations, and the Fortune Star Chinese movie library and hope to explore new growth opportunities.

Ad spending in China surged 17% on an annual basis to 277 billion yuan in the first half of this year, according to data collected by a market research firm.

“As the macroeconomic situation is better than expected, the increase in ad spending for the whole year will be around 13%,” CTR Market Research Co said Monday.

Dongfeng Motor Group Co said its joint venture with Taiwan’s largest auto maker Yulon Motor Co Ltd has been approved by China’s central government. Both firms pledged to invest 775 billion yuan into the 50-50 joint venture, the nation’s third-largest auto group said in a statement on Monday. The deal was signed off by the National Development and Reform Commission on July 29.

Shanghai Movers

China Cosco lost 3.6% to 9.33 yuan and China Shipping Development Co, a unit of China’s second-biggest sea-cargo group, fell 4.2% to 9.33 yuan.

Air China Ltd fell 3.2% to 12.10 yuan.

Poly Real Estate fell 2.7% to 12.27 yuan and Gemdale Corp fell 2.9% to 6.76 yuan.

Changjiang Securities Co fell 4.9% to 11.79 yuan after the brokerage firm said first half net fell 23% from a year earlier.

Shandong Gold Mining Co fell 4.1% to 38.07 yuan after it halted production at four of its mines for safety checks.