Weekly Surge of 9% in Shanghai; FDI Surges 6.1% in China

Chandrasekhar Atreya
15 Oct, 2010
New York City

Stocks in Shanghai soared more than 3% due to record FDI and soared more than 9% in the week. August trade surplus with U.S. reached a record $28 billion. Both property prices and transaction volumes rose in September and regulatory curbs fail to stem the price increase.

[R]5:00 PM Hong Kong, China – Stocks in Shanghai soared more than 3% due to record FDI and soared more than 9% in the week. August trade surplus with U.S. reached a record $28 billion. Both property prices and transaction volumes rose in September and regulatory curbs fail to stem the price increase.[/R]

Stocks in China rose for the seventh trading day in a row and extended the longest rally in eleven months. However, stocks in Hong Kong declined tracking losses in New York.

Hang Seng Index in Hong Kong dropped 0.40% or 94.54 to close at 23,757.63 and for the week gained 3.55%. The CSI 300 Index in China gained 3.21% or 103.54 to close at 3,327.68 and soared 9.31% in the week.

Foreign direct investment grew at a faster pace in China in September, adding to pressures on the nation’s exchange rate.

Investments rose 6.1% from a year earlier to $8.4 billion in September, after a 1.4% gain in August, the Ministry of Commerce said in statement in Beijing on Friday. Investments in the first nine months of the year climbed 16.6% to $74.3 billion.

China’s trade surplus with U.S. surged to a record $28 billion in August, adding fuel to concerns that a weak Chinese currency gave the country an unfair advantage.

China’s exports to the U.S climbed to a record $35.3 billion, while U.S. exports to China dipped to $7.3 billion, according to Commerce Department figures released Thursday.

The yuan exchange rate must not be used as a scapegoat for U.S. economic woes, Chinese officials said Friday ahead of a U.S. Treasury Department report that could label China as a currency manipulator.

“The United States cannot use domestic reasons to pass on its domestic employment and economic growth problems to other nations. The yuan’s rate must not be the scapegoat for U.S. domestic problems,” Commerce Ministry spokesman Yao Jian told reporters.

China rebuffed Japan’s calls for it to make its exchange rate more flexible, signaling increasing tensions among these two giant economies of Asia. Earlier, South Korea also rebuked Japan yesterday for criticizing its foreign exchange policy.

It is unreasonable for Japan to criticize China on the value of the yuan, Yao Jian, spokesman for China’s Ministry of Commerce said at a briefing in Peking on Friday.

The Chinese Academy of Social Sciences warned Friday that China may have to raise its annual inflation target just a week before September data are expected to show consumer prices at a two-year high.

The academy in a report, suggested that the government may have to revise its inflation target for the year from the current 3% to 4%.

Outstanding mortgages in Shanghai in September dropped for a second month as tighter government controls on housing loans began to take effect, the local banking regulator said Thursday.

Total mortgage lending outstanding fell by 427 million yuan, after falling 240 million yuan in August, according to the Shanghai Bureau of the China Banking Regulatory Commission.

Both property prices and transaction volumes rose in September from the previous month, underscoring the need for stronger measures to curb the property bubble in China.

Prices in 70 cities climbed 0.5% from August, 9.1% from a year ago and the value of property sales soared 56%, according to data from the statistics bureau released Friday.

Gemdale Corp bought a plot of land for residential and commercial development in Shanghai’s Pudong district for 2.3 billion yuan, more than four times the initial auction price of 534 million yuan, the Shanghai Daily reported.

Loans in Hong Kong are on track for a record year as mainland companies hurt by financing restrictions at home, took advantage of lower funding costs in a market led by HSBC Holdings Plc.

China’s Land Ministry fined automaker BYD Co to pay 2.95 million yuan and seized buildings and equipment from a site where the company was building a new factory in Northern China which was zoned as farm land.