Shanghai Gains 1%; Low Coal Reserves at Power Plants

Chandrasekhar Atreya
25 Nov, 2010
New York City

Stocks in Shanghai and Hong Kong closed higher tracking the gains in international markets. Coal reserves at some power plants are very low in China. Rusal enters China with a joint venture to sell aluminum. Hong Kong debt rating lifted higher.

[R]5:00 PM Hong Kong, China – Stocks in Shanghai and Hong Kong closed higher tracking the gains in international markets. Coal reserves at some power plants are very low in China. Rusal enters China with a joint venture to sell aluminum. Hong Kong debt rating lifted higher.[/R]

Shanghai stocks rose for the second day in a row as commodities rose and markets in Europe and New York closed higher. Property developers closed higher in Shanghai and a rating agency lifted Hong Kong debt rating.

The Shanghai Composite Index added 1.34% or 38.32 to close at 2,898.26. The CSI 300 Index gained 1.46% or 46.44 to close at 3,223.48. The Hang Seng Index in Hong Kong added 0.13% or 30.82 to close at 23,054.68.

The People’s Bank of China will use all tools at its disposal including liquidity management, to steer money and credit growth back to normal, said Hu Xiaolian, a Deputy Governor with the central bank in his remarks published on Wednesday.

His remarks are yet another signal from the central bank as it prepares to tighten liquidity to choke resurgent inflation that reached a 25-month high of 4.4% in October.

Alcatel-Lucent, which won deals worth some $5.6 billion in China and the U.S. in November, said it expects to grow rapidly in China through the development of 4G, mobile network.

“The whole world is shifting to mobile broadband in 4G network and the user demand is shifting from voice to video,” Ben Verwaayen, CEO of the company said in Beijing on Wednesday.

United Co Rusal, the world’s largest aluminum producer, said it will acquire 33% stake in a trading unit of China North Industries Corp and form a joint venture to expand business in China.

Rusal said it plans to buy the stake in Shenzhen North Investments Corp, which sells primarily aluminum in China and Southeast Asia, the Russian company said in its filing to the Hong Kong Stock Exchange on Wednesday.

Revenue of software firms in China in the first 10 months of the year surged 29.9% from a year ago period to 1.09 trillion yuan, the Ministry of Industry and Information Technology said on Wednesday.

In this period, the industry’s revenue was more than 10 times that in the same period of 2001, up 38% annually, the ministry said on its Web site.

China confirmed on Wednesday that coal reserves at some of its power plants have fallen to extreme low levels and pledged to increase coal shipments to ensure adequate stocks during winter season.

“Although coal shipments to power plants have increased since early November, reserves in the key 349 power plants have dropped to less than 35 million tons from 38 million tons in mid-November,” the Ministry of Railway said in a statement.

The Hong Kong Monetary Authority said on Wednesday they will release a new series of HK$1,000 banknotes for circulation from December 7, 2010.

Starting from that date, the new notes will be available for exchange at the three note-issuing banks, namely Standard Chartered Bank (Hong Kong) Ltd, the Hong Kong and Shanghai Banking Corp Ltd and Bank of China (Hong Kong) Ltd.

Fitch Ratings, the ratings agency, today raised Hong Kong’s debt rating to its second-highest one, citing the city’s fiscal strength to withstand external shocks with its reserves.

The island nation’s long-term international debt rating was raised to AA+ from AA, with a stable outlook, and long-term local debt rating was kept at AA+ level, Fitch said in a statement today.

Stock Movers

The government mandated energy curbs have reduced cement production leading to a price rise. Anhui Conch Cement Co, the largest cement maker in China, gained 5.8% to 24.64 yuan. Tangshan Jidong Cement Co also surged 8.4% to 21.07 yuan.

China Securities Journal said this week that China government will soon announce plans to develop construction machinery sector.

Sany Heavy, maker of machinery for handling concrete, gained 8.2% as it resumed trading today, after a shareholders meeting. Guangxi Liugong Machinery Co also gained 4.6% to close at 36.12 yuan.

Property stocks made some gains today paring some of their earlier losses. Poly Real Estate gained 5.8% to 12.87 yuan and China Vanke Co climbed 4% to 8.40 yuan.

PetroChina added 2.1% to 11.18 yuan and China Petroleum & Chemical Co, also known as Sinopec, gained 1.1% to 8.25 yuan.