China Stocks Brave Sudden Rate Hike; HK Stocks Fall

Chandrasekhar Atreya
20 Oct, 2010
New York City

Stocks in China rallied from the earlier lows after the surprised rates increase but Hong Kong stocks declined. China contradicted the U.S media reports and said exports of rate earth minerals will continue and may gain momentum. Morgan Stanley gets approval to sell China International Capital.

[R]5:00 PM Hong Kong, China – Stocks in China rallied to pare earlier losses after China suddenly increased interest rates but Hong Kong stocks declined. China contradicted the U.S media reports and said exports of rate earth minerals will continue and may gain momentum. Morgan Stanley gets regulatory approval to sell its 34% stake in China International Capital.[/R]

Mainland China stocks recovered early losses due to the sudden interest rate hike and closed higher. However stocks in Hong Kong closed lower.

The CSI 300 Index in China gained 0.63% or 21.2 points to close at 3,396.88. The Hang Seng Index in Hong Kong lost 0.83% or 196.50 points to close at 23,567.23.

China raised rate for the first time in nearly three years, a move that reflects its concern about rising domestic asset prices and stubborn inflation. It said it would raise benchmark one-year deposit rate by 25 basis points to 2.5% and lending rates by the same to 5.56% respectively.

Crude oil prices declined and the dollar gained against all currencies.

According to the five year plan wages will be boosted in China, the urbanization rate will be increased and strategic industries will be nurtured with a focus on new energy as the economy grows by an estimated 50% over the period 2011 to 2015.

Chinese Premier Wen Jiabao will meet with the leaders of South Korea and Japan at the 13th China-Association of Southeast Asian Nation’s Summit in Vietnam on October 28 to 30, Ministry of Foreign Affairs spokesman Ma Zhaoxu said Wednesday.

China’s economy will expand at the slowest pace in a decade next year, with GDP increasing 8.5% in 2011 from the estimated increase of 9.5%, according to forecasts by the World Bank released yesterday.

Baidu’s market share grew to 72.9% from 70.8% in the second quarter, said iResearch in a report on Tuesday. Google’s market share fell to 24.6% from 27.3% in the same period, the report showed.

Baidu Inc, China’s largest search engine, entered the country’s online retail market with a new joint venture as it takes aim at e-commerce leader Taobao.com.

Baidu teamed with Japanese e-commerce company Rakuten Inc Tuesday as it launched its online B2C platform Lekutian to tap the growing online shopping demand from more than 400 million internet users in China.

Morgan Stanley said it won approval from China regulators to sell its 34.3% stake in investment bank China International Capital Corp, Shanghai Securities News reported yesterday.

About 40% of mainland employers are trying to fill vacancies that have grown 25% from a year earlier, according to a survey conducted by Manpower, a leading human resources service company.

The survey conducted across 36 countries and regions and about 35,000 employers showed that domestic companies face an overall talent shortage from production operators to managers. The survey covered a total of 1,384 companies based in mainland China.

China pledged to maintain supplies of rare earths and signaled exports of rare earths will continue and may even rise next year.

The Commerce Ministry denied a New York Times report that the government has extended an embargo of rare earth metals exports to Japan to include the U.S. and Europe.

“China will continue to supply rare earth minerals to the world,” the ministry said in a faxed reply to questions on Wednesday.

Yangtze, the third-longest river in the world after the Amazon and Nile, handles 80% of China’s river freight. The waterway ferried 1.34 billion tons of cargo in 2009, more than triple the 400 million tons it carried in 2000, according to government data.

Cosco Pacific, controlled by China’s largest shipping group, holds stakes in terminal operating ventures in the river’s delta feeder ports, including Yangzhou and Zhangjiagang.

Ningbo Port Co, operator of the country’s second busiest port, raised 7.4 billion yuan in an IPO last month and plans to use the proceeds to build coal and container berths on the river.