China Region Stocks Rally; China Reserves at Record $2.84 Trillion

Chandrasekhar Atreya
11 Jan, 2011
New York City

Stock indexes in Shanghai rally 0.5% and in Hong Kong surge 1%. China

[R]5:00 PM Hong Kong, China – Stock indexes in Shanghai rally 0.5% and in Hong Kong surge 1%. China’s foreign exchange reserves reach a record $2.84 trillion in 2010. China Railway Materials Commercial Co plans a dual listing in Shanghai and Hong Kong to raise $1.8 billion.[/R]

Stocks in Shanghai closed higher as property developers and financials led the gainers. Investors bid up stocks ahead of earnings in the next three weeks and despite the tighter monetary conditions by the central bank and regulators.

The Shanghai Composite Index traded 0.47% higher to close at 2,805.49. The CSI 300 Index gained 0.55% or 16.99 to 3,125.98.

The Hang Seng Index in Hong Kong gained 0.99% or 233.08 to 23,760.34.

The People’s Bank of China said today the country’s foreign exchange reserves surged by a record $199 billion in the quarter ended December from the previous quarter to end 2010 at $2.84 trillion.

Surplus funds due to monetary easing in the U.S. and other industrialized nations have been flowing into China, prompting the central bank to conduct a massive dollar buying operation and a surge in the reserves.

The People''s Bank of China used 14-day bond repurchase agreements for the first time in three years to tighten ample market liquidity, making the country’s benchmark seven-day repo rate to reach 2.4%.

China’s auto sales in 2010 rose 32.37% to 18.06 million units, according to China Association of Automobile Manufacturers statement on Monday. Passenger vehicle sales in the world’s largest auto market rose 33.2% to 13.76 million units last year, the association said in a statement.

China Railway Materials Commercial Co plans to raise up to $1.8 billion in a dual listing in Shanghai and Hong Kong, according to Chairman Song Yufang.

The company was set up last year to become the publicly-traded arm of its parent, China Railway Materials Commercial Corp, which is overseen by the state-owned Assets Supervision and Administration Commission.

CRMSC is planning to launch an IPO later this year or early 2012 to raise up to 12 billion yuan ($1.8 billion), Song told reporters at a forum over the weekend.

Wenzhou City, in east China’s Zhejiang Province, has launched a scheme under which individuals will be allowed to invest overseas on a trial basis to encourage capital outflows amid high inflation and rising foreign exchange reserves.

Residents of Wenzhou can invest up to $3 million overseas in any single investment or spend no more than $200 million annually, and may not invest in overseas financial companies, the Wenzhou Foreign Trade and Economic Cooperation Bureau said in a statement posted on its Web site.

China National Chemical Corp has signed a deal to buy 60% of Israel’s MA Industries, China’s latest move to grow in the global agricultural chemical market.

The deal, which values the world’s largest maker of generic crop protection chemicals at $2.4 billion, will see MA’s parent Koor Industries retain 40% of the maker of fungicides, pesticides and herbicides, Koor said on Sunday.

Baoshan Iron and Steel Co said on Monday in an earnings forecast that 2010 profit more than doubled from 2009 to reach 12.8 billion yuan, or 0.73 yuan per share.

Sales in 2010 jumped 36% to 202.4 billion yuan, the company said in a stock exchange filing.

Shanghai International Port (Group) Co said on Monday that profit surged 44% in 2010 from a year ago to 5.4 billion yuan as sea transport picked up with the recovery of global trade.

Operating income rose 14.6% to 18.97 billion yuan, the company said in a statement to the Shanghai Stock Exchange.

Stock Movers

China Vanke Co, the largest developer of China, jumped 3.2% to 9.03 yuan. Gemdale Corp surged 7.84% to 7.43 yuan.

Industrial and Commercial Bank of China added 0.47% to 4.26 yuan and China Pacific Insurance Group Co gained 1.21% to 22.50 yuan.

Huaxin Cement Co closed down 9.36% to 26.53 yuan after dropping the daily limit of 10% in early trade.

FAW Car Co fell 1.34% to 16.18 yuan while Harbin Dongan Auto Engine Co fell 1.9% to 11.37 yuan.