Shanghai, HK Stocks Rally; China Increase U.S. Debt Holdings

Chandrasekhar Atreya
19 Oct, 2010
New York City

Stocks in China surged on the expectations of sustained economic growth in the next five years and HK stocks edged higher after the U.S. dollar traded higher. China

[R]5:00 PM Hong Kong, China – Stocks in China surged on the expectations of sustained economic growth in the next five years and HK stocks edged higher after the U.S. dollar traded higher. China’s U.S. Treasury holdings rise in August for the second month. China plans to restrict exports of rare earth minerals.[/R]

Shanghai stocks rallied in the afternoon session pushing the benchmark index past the 3,000 for the first time since April on hopes that the next five year plans will stoke industry growth further.

The CSI 300 Index in China gained 2.1% or 69.51 to close at 3,375.67. Hang Seng Index in Hong Kong gained 1.25% or 294.35 to close at 23,763.73.

AIA Group Ltd closed its public offering two days ahead of schedule after it drew strong response from investors.

The strong interest from traditional funds and high-profile Chinese investors in the sale of the unit of American International Group Inc comes amid a flood of Asian IPOs that have cemented the region’s dominance in initial public offerings this year.

China, the largest holder of U.S. Treasury debt, increased its holdings for a second month in a row in August after two months of declines.

China’s holding of U.S. Treasuries rose to $868.4 billion in August, the Treasury Department reported Monday. That was up 2.6% and followed a smaller rise of 0.4% in July, after having fallen 2.8% in June and 3.6% in July.

The average returns of funds managed by overseas institutions trading in yuan-denominated shares slumped 13.99% in the first three quarters of this year, following a 18.96% decline in mainland china’s key stock index, an industry report said.

Funds managed under the Qualified Foreign Institutional Investor program, which allows overseas investors to invest in stocks, bonds and funds on the mainland, showed bigger declines than the 5.42% decrease posted by domestic equity funds, research firm Lipper & Co said Monday.

China could help stem the rising inflation it is likely to face in the near future by guiding the yuan higher, the World Bank said in a report issued Tuesday.

Further asset price increases would pose a key risk to the rapidly growing Chinese economy. But, a gradual rise in the local currency’s nominal exchange rate could help stem the price pressures, the Washington-based World Bank said.

China is considering reduction in export quotas next year for rare earth minerals to protect the country’s reserves from over exploitation and encourage diversification away from China, Lin Donglu, Secretary General of the Chinese Society of Rare Earths said Tuesday.

Dalian Port (PDA) Co’s listing plan on the Shanghai Stock Exchange was approved Monday by the China Securities Regulatory Commission.

Dalian Port (PDA) will sell as many as 2.4 billion new shares, or 45.06% of the total stake, according to the prospectus on the web site of the regulator. Half of the new shares will be available to institutional and individual investors while the other half will be placed for its parent company Dalian Port Group, which holds a 62.09% stake in Dalian Port.

Shanghai’s exports rose 22.4% from a year earlier to $16 billion in September, compared with a 25.5% rise in August, the Shanghai Statistics Bureau said Tuesday.

Exports of high-tech products surged 31.5% to $7.5 billion, the fastest among all categories while processed products gained only 16%.

Shanghai is on track to achieve its target of 8% economic growth this year after exports, retail sales and investments for September showed stable expansion.

The city’s GDP expanded at 12.7% from a year earlier in the first half, after positing a 8.2% expansion in 2009.

Baosteel Group Corp launched Monday two projects to make auto parts such as bumpers, with a total outlay of 450 million yuan.

The projects are based on hot stamping and hydroforming, both newer metal forming technologies that produce strong, lightweight pieces, which are being imported now. Baosteel supplies almost half of the auto sheets to domestic automakers.