Shanghai Indexes Rebound 0.8%, Drop 3% in the Week

Chandrasekhar Atreya
19 Nov, 2010
New York City

Stocks in China gained for the day but dropped more than 3% in the week. China is considering tightening rules to avoid insider trading. SAIC Motor Co buys nearly 1% stake in General Motor. Strong demand from China and India is expected to boost gold sale in 2010 according to the World Gold Council.

[R]5:00 PM Hong Kong, China – Stocks in China gained for the day but dropped more than 3% in the week. China is considering tightening rules to avoid insider trading. SAIC Motor Co buys nearly 1% stake in General Motor. Strong demand from China and India is expected to boost gold sale in 2010 according to the World Gold Council.[/R]

Inflation concerns continued to dampen investor sentiment in Shanghai as the index dropped more than 1% in the morning session with weak performances by financial and commodity shares.

However the benchmark Shanghai Composite Index rallied to gain 0.81% or 23.11 points to close at 2,888.57. The CSI 300 Index gained 0.98% or 30.88 to close at 3,178.85.

The SCI fell 3.24% for the week and the CSI 300 dropped 3.43% for the week. The SCI has lost more than 9% in the last two weeks of trading.

Governmental plans to cool property bubble in Hong Kong led to a drop in the benchmark index. Hong Kong property prices have soared nearly 50% in the last twenty two months and expectations are rising that the government will take stringent measures.

The Hang Seng Index in Hong Kong dropped 0.13% or 31.68 to close at 23,605.71. For the week the index fell 2.55%.

China is considering a fresh crackdown on insider trading to ensure the capital market integrity and protect investor interests. In a writ released on Thursday the State Council, China’s Cabinet, said the current situation is quite severe with the launch of the stock-index futures, which has made tracing of insider trading even more difficult.

The State Council ordered for stricter rules to prevent leakage of confidential information ahead of public offering and mergers and acquisitions.

SAIC Motor Corp agreed to pay $500 million for taking 0.97% stake in General Motor’s IPO. SAIC Motor HK Investment Ltd, a wholly-owned subsidiary of SAIC, will buy 15.15 million shares at $33 a share with funds to be raised in Hong Kong, the automaker said in a statement today.

General Motors, which had partnered SAIC since 1997, reported last week net earnings of $4.77 billion in the first three quarters of this year, on track for its first profitable year since 2004.

Trade settlements in yuan are expected to touch 10% of global trade settlement in five years as China looks to boost the use of its currency globally, according to a banker.

“The yuan trade settlement is expected to contribute 5% to 10% of the global trade settlement in five years from less than 1% now,” said Andrew Ng, head of Treasury and Markets at DBS, Southeast Asia’s biggest bank, in Shanghai on Thursday.

Bank of East Asia completed its first settlement for yuan overseas direct investment since the trial was launched in the Xinjiang Uygur Autonomous Region in October.

Companies set up is this province are allowed to invest overseas with yuan. Previously, Chinese companies were required to use the State Administration of Foreign Exchange to convert the yuan into foreign currencies to make that overseas investment.

A very strong appetite from China and India for gold is expected to boost the demand for the yellow metal globally this year from 2009, according to the World Gold Council.

Consumers from the world’s two largest gold markets continue to push up demand for gold due to rising income, high savings rate and a strong economic growth, the WGC said.

Bayer MaterialScience plans to spend $150 million to build five new downstream facilities in China by 2012. The company said it will build three new polyurethane system houses in Shanghai, Qingdao and Chongqing, one new color compounding and design center in Chingqing and a sheet facility in Guangzhou.