Shanghai Focuses on Inflation; Hong Kong Indexes Rise

Chandrasekhar Atreya
29 Nov, 2010
New York City

Stocks in Shanghai declined on the worries of accelerating inflation and in Hong Kong rose tracking optimism related to the U.S. holiday sales. China Huaneng Group Corp and Chongqing Rural Commercial Bank plan HK initial public offerings totaling $3.73 billion.

[R]5:00 PM Hong Kong, China – Stocks in Shanghai declined on the worries of accelerating inflation and in Hong Kong rose tracking optimism related to the U.S. holiday sales. China Huaneng Group Corp and Chongqing Rural Commercial Bank plan HK initial public offerings totaling $3.73 billion.[/R]

The key benchmark index in Shanghai closed slightly lower after reports suggested that inflation may accelerate in November after rising in October. The China Securities Journal reported that CPI in November will likely be between 4.4% and 5%, citing several experts.

Investors also awaited the upcoming central economic work conference that sets the macro-economic policies for the next year.

The Shanghai Composite Index dropped 0.19% or 5.34 points to close at 2,866.34. The CSI 300 Index lost 0.15% or 4.80 to close at 3,190.05.

The Hang Seng Index in Hong Kong gained 1.26% or 288.97 to close at 23,166.22 after the preliminary reports indicated U.S. holiday sales are ahead of last year.

The People’s Bank of China set the dollar-yuan parity at its highest level in more than three weeks today. The yuan closed at 6.6765 to a dollar after rising as high as 6.6770 early today.

Authorities in Hubei Province in China said on Sunday they will invest more than 180 billion yuan to expand the throughput capacity of Wuhan New Port on the Yangtze River between the years 2011 and 2020.

The authorities are exploring the possibility of making this port as the largest on the river covering cities like Wuhan, Huanggang and Ezhou.

Bridas Corp, a 50-50 joint venture between Bridas Energy Holdings Ltd and Beijing-based CNOOC, agreed to purchase along with Argentina’s billionaire Bulgheroni family the 60% of shares they do not own of Pan American Energy LLC, from BP Plc for $7.06 billion.

Bridas Energy and CNOOC will pay $2.47 billion each to finance the acquisition with the remaining to come from third party loans, CNOOC said in a statement on Sunday. The deal is expected to be completed in the first half of next year.

China Huaneng Group Corp, China’s largest electricity producer, aims to raise as much as $2.18 billion in the initial public offering of its renewable energy unit in Hong Kong according to IPO terms sent to investors.

Chongqing Rural Commercial Bank said it will seek $1.55 billion from its IPO in Hong Kong by offering 2 billion shares at HK$4.50 to HK$6.00 per share.

Stock Movers

In Shanghai trading, resource companies, property developers and banks declined but pharmaceutical companies rose.

Jiangxi Copper Co dropped 2.2% to 34.21 yuan and Aluminum Corp of China fell 1.4% to 10.22 yuan.

Shandong Gold Mining Co dropped 3.3% to 52.72 yuan.

Tibet Rhodiola Pharmaceutical Holding Co and Hubei Guangji Pharmaceutical Co jumped the daily limit of 10% to 17.92 yuan and 13.90 respectively. Shanghai Pharmaceuticals Holding Co gained 0.7% to 23.81 yuan.