China Stocks Gain; July FDI Surges 20%

Chandrasekhar Atreya
17 Aug, 2010
New York City

Stocks in China gained for the third day after Shanghai industrial production expanded at 23.7% and international investments increased 20% in the first seven months. China cut is U.S. Treasury debt holdings. Overseas mergers and acquisitions by China based companies in first half surged 50%.

[R]5:00 PM Hong Kong, China – Stocks in China gained for the third day after Shanghai industrial production expanded at 23.7% and international investments increased 20% in the first seven months. China cut is U.S. Treasury debt holdings. Overseas mergers and acquisitions by China based companies in first half surged 50%.[/R]

China stocks gained for the third day led by industrial and consumer companies after foreign investments surged 20% in the first seven months and Shanghai industrial production expanded 23.7% in July.

The stocks in Hong Kong rallied and jobless rate in the quarter ending in July dropped to eighteen months low.

The CSI 300 Index in China gained 0.7% to close at 2,942.29. The Hang Seng Index in Hong Kong gained 0.12% or 25.31 to close at 21,137.43.

China is poised to overtake Japan as the world’s second-biggest equities market by value, indicating the strength of the economy and recent large initial public offerings.

The combined values of companies trading on China’s equities reached $3.09 trillion as of Monday, compared with $3.51 trillion for Japan according to data compiled by Bloomberg.

Chinese visitors to Japan jumped 80% over last year providing a much needed boost to business in Japan’s luxury stores and luxury outlets.

Tsingtao Brewery Co plans to acquire an equity stake in Asahi Breweries Ltd’s subsidiary Hangzhou Xihu Beer Asahi Co, The Economic Observer reported on Monday.

Asahi Breweries owns 55% of Xihu Beer through a Hong Kong subsidiary, with the remaining 45% owned by Hangzhou Industrial Assets Management Co, which is run by the government of Hangzhou in Zhejiang Province. Tsingtao is expected to buy the latter firm’s stake for nearly 2 billion yuan.

China cut its holdings of United States Treasury debt for a second straight month in June while increasing its holdings in Japan and Britain. The holdings fell by $24 billion to $843.7 billion, a drop of 2.7%, the U.S. Treasury Department said Monday in its monthly report on debt holdings.

Overseas mergers and acquisitions by China rose more than 50% in the first half of 2010 from a year ago and the trend is expected to continue, an industry report said Monday. There were 99 international deals completed between January and June 2010, PricewaterhouseCoopers said in a report yesterday. Seven of those deals exceeded $1 billion compared to just three a year earlier.

Shanghai’s industrial production expanded 23.7% from a year earlier to 249.2 billion yuan in July, and up 20.4% from June’s increase, the Shanghai Statistics Bureau said Monday. The city’s six key sectors that grew and helped the expansion were information technology, vehicles, refinery, fine steel, machinery equipment and biomedicine.

The amount of foreign direct investment that flowed into China in July grew by 20.2% year-on-year to $6.924 billion, a Ministry of Commerce spokesman said today. The figure for the first seven months totaled $58.35 billion, an increase of 20.65% from a year earlier, ministry spokesman Yao Jian said.

Toll Group said Monday it completed the acquisition of its Chinese joint venture ST-Anda to launch its own brand in the Chinese market. The Australia-based logistics service provider acquired a 49% stake in ST-Anda to increase its ownership in the company to 100%, Toll said Monday without giving the details of the transaction.

The Hong Kong government sold today a residential land site on the Kowloon Peninsula for a price higher than the market estimate in the first auction after the government initiated tightened mortgage rules to arrest property bubbles.

A 36,600 square meters plot of land was sold for HK$4.1 billion. The government is also auctioning today a Hung Hom district plot with a buildable area of 366,000 square feet that could fetch as much as HK$2.5 billion.

Jobless rate in Hong Kong feel to the lowest level since December 2008, a sign that should help the city to grow. The rate for three months ended July 31 was 4.3% as against 4.6% in the previous quarter, the government said on its Web site today.

Shanghai Movers

Anhui Xinhua, a retailer and publisher of textbooks, rallied 7.1% to 13.48 yuan and Huawen Media Investment Corp surged 5.8% to 6.58 yuan.

Media-related stocks helped drive an index tracking consumer discretionary companies 2.4% higher on the CSI 300, making it the biggest gain in the 10 industry groups tracked.

Sany Heavy gained 6.7% to 25.08 yuan, after Goldman Sachs upgraded the stock to ‘buy’ from ‘neutral.’

Cosco Shipping Co dropped 1.8% to 8.14 yuan.

TBEA Co, a manufacturer of electrical transformers, added 6.9% to 17.66 yuan after it reopened for trading suspension of four days.