Fuel Prices on the Rise in China; Banks Close Up

Nigel Thomas
11 Nov, 2010
New York City

Stocks in China region closed higher on the strength in the banking and resource stocks. Rating agency Moody

[R]5:00 Hong Kong – Stocks in China region closed higher on the strength in the banking and resource stocks. Rating agency Moody’s lifted China sovereign debt one notch higher after October trade surplus increased. Oil complex stocks closed higher on the prospect of higher fuel prices.[/R]

Stocks in China region closed higher after banks rebounded and resource stocks closed up. Stocks closed higher despite the mounting pressures on inflation and rising petroleum products prices. Food and agriculture products makers are expected to pass higher prices to consumers.

After the release of October trade surplus, Moody’s Investors Services revised China debt higher to AA3, only three steps below the top debt rating. The rating agency also cited the rising fiscal strength and ability to deal with the fallout from the credit markets and maintained positive outlook.

APEC foreign ministers urged member nations to hasten the reforms and set up free trade in the region as they fear world economy may slide into recession. The talks among G20 nations are not expected to deliver immediate solution to the rising imbalances of trade and investments.

Banks advanced for the second day after a report in Financial Times suggested that domestic market oriented banks will be exempt from the higher capital requirements.

The news has been widely followed in the financial markets around the world but sources close to several finance ministries among G20 nations strongly denied the possibility of any exemption.

Heilongjiang Agriculture Company rose as much as 1.2% but closed lower 1.9%.

The Shanghai Composite Index increased 1% or 32.39 to 3,147.74 and the CSI Index increased 0.3% to 3,509.98.

Bank of Communications Co added 0.78% to 6.15 yuan and Agriculture Bank of China Limited increased 1.1% 2.78 yuan.

Oil complex stocks rose after international crude oil prices increased and on the rising speculation that China may pass on higher fuel costs to consumers.

China Petroleum & Chemical Corp increased 5% to 9.48 yun and PetroChina added 7% to 12.71 yuan. Rising diesel shortages despite record crude oil processing last month has firmed up the prices for petroleum products.