China Hikes Prices of Gasoline and Diesel by 4%; Indexes Drop 1%

Chandrasekhar Atreya
22 Dec, 2010
New York City

Shanghai stock indexes dropped 1% after Korea announced a plan to conduct second live-military exercise on Monday. China increase retail energy prices again. State-Grid of China acquires seven power distributors in Brazil with a 30-year license to operate the power lines for $1 billion.

[R]5:00 PM Hong Kong, China – Shanghai stock indexes dropped 1% after Korea announced a plan to conduct second live-military exercise on Monday. China increase retail energy prices again. State-Grid of China acquires seven power distributors in Brazil with a 30-year license to operate the power lines for $1 billion.[/R]

Stocks in China region declined after government announced another price increase for retail sale and South Korea announced another live military exercise on Monday.

The Shanghai Composite Index lost 0.90% or 26.22 to close at 2,877.90 and the CSI 300 Index dropped 1.05% or 34.06 to close at 3,215.45.

The Hang Seng Index in Hong Kong gained 0.22% or 51.33 to close at 23,045.19.

China’s State Grid has bought over seven Brazilian power distributors for $1 billion along with a 30-year license to operate the power lines and other infrastructures in Brazil’s heavily populated southeast, the state-owned Assets Supervision and Administration Commission said in a statement today.

The government owned State Grid will also provide power services to Brasilia, Rio de Janeiro and Sao Paulo, the statement said. According to the terms of the deal authorities in Brazil may renew the license for another 20 years.

China raised the retail price of gasoline and diesel by up to 4% today because of higher crude prices on the international market.

The National Development and Reform Commission, the body which sets energy prices, raised gasoline by 310 yuan a ton or 0.23 yuan per liter, and diesel by 300 yuan a ton, or 0.26 yuan per liter, from midnight of Tuesday.

A bad loan ratio of 2% for banks in China is tolerable after factoring in local government debts and tightening measures in vogue in the real estate sector, the country’s banking regulator said on Tuesday.

“As a developing country, a 2% non-performing loan ratio is considered realistic and reasonable,” Liu Mingkang, Chairman of the China Banking Regulatory Commission, was quoted as saying by Caixin Online.

Almost two-thirds of business professionals expect their enterprises in China to earn higher profits in 2011, with nearly half of them saying rising prices as the biggest obstacle, according to a survey result released on Tuesday.

More than 50% of the survey participants are confident about the country’s economic outlook for 2011, with 57.6% predicting the country’s GDP to expand from 8% to 10%, according to the annual economic business sentiment survey compiled by CPA Australia.

Urumqi-based Xinjiang Goldwind Science and Technology Co announced that one of its units won a contract to sell wind power in the state of Illinois, United States.

Under the agreement, a wind farm to be built by Xinjiang Goldwind’s wholly-owned unit TianRun Shady Oaks LLC will supply power to Commonwealth Edison Co for 20 years from 2012, the company said in its regulatory filing to the Shenzhen Stock Exchange on Tuesday.

Revenues from telecom industry in China rose 6.6% in the first 11 months of 2010 from a year ago period to 819.03 billion yuan, the Ministry of Industry and Information Technology said on Tuesday.

The data confirmed that while the number of mobile phone users continued to rise, the use of land line subscribers declined.

China leads the global market for initial public offerings this year while the international board expected to be set up in 2011 may also significantly boost IPO fund raising, according to Ernst & Young.

The auditing firm in Shanghai sees global IPOs to reach a record $300 billion this year. IPO activities in China, including the mainland, Hong Kong and Taiwan topped $117.9 billion in the first 11 months of the year, up 46% from a year ago period, Ernst & Young said.

Stock Movers

Bank stocks fell after China’s central bank said it is considering selective control on lending based on the lender’s credit.

Bank of China dipped 0.6% to 3.25 yuan and Industrial and Commercial Bank of China fell 0.7% to 4.18 yuan.

Oil producers dropped even after the government announced a rise in the prices of gasoline and diesel. China Petroleum & Chemical Corp dipped 0.4% to 8.23 yuan.

Metal producers performed better as copper and aluminum futures gained on the Shanghai market following their higher prices overseas.

Jiangxi Copper Co edged up 0.1% to 41.43 yuan while Aluminum Corp of China gained 0.4% to 10.41 yuan.