China Stocks Plunge; Chalco, CRCC Report Losses

Chandrasekhar Atreya
27 Oct, 2010
New York City

Stocks in Shanghai drop after several companies reported losses. Luxury home prices in Hong Kong the previous peak in 1997. Chalco reports quarterly loss while CRCC expects to declare losses. Net profit at BYD drops by 99%.

[R]5:00 PM Hong Kong, China – Stocks in Shanghai drop after several companies reported losses. Luxury home prices in Hong Kong the previous peak in 1997. Chalco reports quarterly loss while CRCC expects to declare losses. Net profit at BYD drops by 99%.[/R]

Shanghai stocks traded lower to push the benchmark index down after Chalco and China Railway Construction Corp reported losses and net profit at BYD dropped 99%. Stocks in Hong Kong fell pushing the benchmark index down in mid-morning and declined steadily thereafter led by commodity stocks.

The CSI 300 Index in China fell 1.79% or 62.21 to close at 3,403.87. The Hang Seng Index in Hong Kong dropped 1.85% or 436.66 to close at 23.164.58.

Shanghai’s industrial production may grow at a slower pace in the fourth quarter of 2010 due to uncertainty in exports and a higher base of comparison, according to Shanghai Statistics Bureau.

In September, the city’s industrial output grew 15.9% from a year earlier, slowing from the 21.1% in August. “The moderation is due to a higher base of comparison last year,” said Wang Zehua, an analyst at the bureau.

Commercial real estate investment finalized on the Chinese mainland totaled $11.9 billion in the quarter to September, a 21% drop from the previous quarter, according to the latest research data released by DTZ, an international real estate service provider.

That, however, still accounted for 40% of overall activity registered in the region during the period according to the research findings.

China plans to build more chain of stores in rural areas to create a network to cover the country’s vast rural stretches to boost domestic consumption of local products as a way to become less-dependant on export led economy.

Prices of luxury homes in Hong Kong exceeded the previous peaks of 1997, fueling speculation that property asset bubble may need to be addressed by the government.

Prices of apartments with at least 100 square meters are selling at 13.8% higher value than in the third quarter of 1997, when it reached a peak, the Hong Kong Monetary Authority said in a presentation posted on its Web site.

Intel Corp’s new chip plant in Dalian, the most advanced semiconductor facility in China began production on Monday.

The $2.5 billion wafer fabrication plant, Intel’s first in Asia, is the largest single investment in China’s high-tech industry, bringing Intel’s total investment in the country to $4.7 billion. The plant covering 163,000 square meters of area employs 1,500 engineers.

HNA Retailing, a retailing arm of China’s aviation company HNA Group, announced Tuesday it invested 900 million yuan to acquire Jiadeli Supermarket as a strategy to expand its business nationwide by the end of next year.

“We plan to increase our total assets and annual revenue to more than 10 billion yuan each within one year, and this acquisition is crucial for us,” Zhang Yi, CEO of HNA Retailing said in Shanghai on Tuesday.

China Railway Construction Corp, which built more than 50% of the rail network in China, expects to post a loss of more than 4.1 billion yuan on its Mecca light rail contract in Saudi Arabia.

China Railway signed the contract with the Saudi government in 2009 to build an 18 kilometer light rail connecting religious sites near Mecca and Medina. By September of 2010, costs had risen to about 16.1 billion yuan from an expected 12.4 billion yuan at the end of last year, the company said.

Aluminum Corp of China said it would lose money in the third quarter as production costs were higher due to higher raw material prices and power. However, the company expects to record a profit for the whole year as it says sales and profitability of its main products are gradually picking up.

Chalco said it posted a net loss of 117.8 million yuan in the quarter ended September, reversing from a profit of 21.3 million yuan a year earlier, according to results released late Monday. The company lost 96 million yuan in the second quarter.

Net profit at Shenzhen-based BYD Co dropped by a bigger than expected 99% in the third quarter ended September due to faltering sales.

The company also known as Build Yourself Dreams, said its net profit in the third quarter plunged from last year’s 1.16 billion yuan to 11.8 million yuan. The market had been warned of a possible drop in profit when in July BYD cut its sales targets for the year by 25% to 600,000 units because of sales decline since April.

A merger between Singapore Exchange Ltd and ASX will make it harder for the exchange in Hong Kong to win listings by commodity companies that can help it achieve the expansion plans announced this year, Charles Li, Chairman of Hong Kong bourse said.

The combination of SGX and ASX would list a combined $484.8 billion of mining, chemical and energy companies, more than the $390 billion offered by Hong Kong Exchanges & Clearing Ltd.