Shanghai Stocks Fear Rate Hike; HK Rallies on U.S. Stimulus

Devan Biswas
03 Nov, 2010
New York City

Stocks in mainland China declined but in Hong Kong increased on the prospects of more stimulus in the U.S. Resource stocks in Shanghai declined on the ongoing rate and tightening worries after the People

[R]5:00 PM Hong Kong – Stocks in mainland China declined but in Hong Kong increased on the prospects of more stimulus in the U.S. Resource stocks in Shanghai declined on the ongoing rate and tightening worries after the People’s Bank of China issued a statement. Bank of China and ICBC closed higher.[/R]

Stocks in Mainland China edged lower on the continued worries that China may join other nations in the region and raise rates and tighten real estate landing. Commodities prices and resource stocks closed lower.

The market speculation intensified after the People’s Bank of China in a statement said that the central bank is seeking to use more price tools to manage inflation and maintain moderate money supply growth and bank lending and seek moderately loose economic policy.

The statement is the continuation of what China has been saying publicly but focuses on more moderate growth and not in the need provide any stimulus measures.

The Shanghai Composite Index declined 14.45 or 0.5% to 3,030.99 and the CSI 300 Index declined 1.2% to 3,420.34.

Stocks in Hong Kong surged on the expectations that the U.S. Fed will provide additional stimulus measures. The expectations lifted the stocks of property developers and transportation companies.

Hang Seng Index rose 2% to 23,144.67, a 30-month high as property prices on the island surpass values seen in 1997. Hang Seng Property Index added 3.4%.

Sun Hung Kai Properties Ltd soared 6.6% Cheung Kong (Holdings) Ltd added 2.6%. New World Development Co rose nearly 3%.

Bank of China Ltd increased 2.2% after President Li Lihui said that the bank has sufficient cash and not looking to raise more capital in the next three years.

Industrial & Commercial Bank of China Ltd jumped more than 4.4% after the bank told financial analysts that the loans to local and regional governments backed lending schemes are supported by adequate capital. The bank has 830 billion yen or 12% of loans to government controlled financial programs according to several research noted including from Mizuho Securities.

Semiconductor Manufacturing International Corp gained more than 4.5% after China’s largest semiconductor company reported quarterly net of $30.4 million compared to a loss of $69.4 million a year ago.

Yanzhou Coal Mining dropped 7% to 29.33 yuan, Jiangxi Copper declined more than 6% and Datong Coal declined 5% to 24.70 yuan.