China Stocks Rally on Aviation Industry and Home Builders Earnings

Chandrasekhar Atreya
12 Jan, 2011
New York City

Shanghai stock indexes rally 0.5% led by developers and banks. Civil aviation industry reports a 37% profit increase in 2010. Consumer confidence in the fourth quarter dipped to a year

[R]5:00 PM Hong Kong, China – Shanghai stock indexes rally 0.5% led by developers and banks. Civil aviation industry reports a 37% profit increase in 2010. Consumer confidence in the fourth quarter dipped to a year’s low in Shanghai on inflation worries and strengthening yuan.[/R]

Indexes in Shanghai rose led by developers and bankers and better than expected earnings from airlines and home builders. Steelmaker Baoshan Iron said it will hold prices firm. China’s steel and power generators are facing dwindling supplies of raw materials as Australia faces rising flood waters.

The Shanghai Composite Index gained 0.56% or 15.60 to 2,821.00 and CSI 300 Index rose 0.51% or 16.08 to 3,142.07.

The Hang Seng Index in Hong Kong surged 1.54% or 365.27 to close at 24,125.61.

Norwegian conglomerate Orkla ASA announced Tuesday it will sell almost all its Elkem unit to chemical group China National BlueStar Corp for nearly $2 billion.

The deal, which also covers a major power contract that Orkla bought last year, includes Elkem Silicon Materials, Elkem Foundry Products, Elkem Carbon and Elkem Solar. However, Orkla will continue to own Elkem Energi AS.

Consumer confidence in Shanghai’s economy declined to a year’s low in the fourth quarter of 2010 on rising inflationary pressure, possible yuan appreciation and stubbornly high housing prices, a survey showed Tuesday.

The Shanghai Consumer Confidence Index fell to 102.3 in the quarter to December, down 4.4 points from the previous quarter and fell 13.6 from a year ago quarter, according to the quarterly survey by the Shanghai University of Finance and Economics.

Baoshan Iron & Steel Co, China’s largest listed steel maker, will raise prices of its main products in February by only 100 yuan a ton as it maintained a cautious pricing policy.

The company said the increase will be applicable to most of its products. For February, hot-rolled coils will be priced at 4,492 yuan to 5,102 yuan a ton while cold-rolled products will cost 5,336 yuan to 6,686 yuan a ton.

China’s civil aviation industry profits surged in 2010 to a record high as economic recovery and a strong demand for air travel boosted passenger traffic.

The combined operating income at China’s airlines and airport operators surged 37.2% annually to 411.5 billion yuan and net profits at 43.7 billion yuan in 2010, the Vice Director of the Civil Aviation Administration of China, Wang Changshun said at a meeting in Beijing on Tuesday.

Western Mining Co’s net profit surged more than 50% last year on higher product prices, the miner said in a preliminary earnings reports on Tuesday.

The Shanghai-based lead miner earned 602 million yuan in 2010.

Stock Movers

Zhonghong Real Estate Co surged 3.92% to 19.07 yuan after it said net income for 2010 surged 610% from a year earlier to about 900 million yuan.

Poly Real Estate rose 2.52% to 15.11 yuan after reporting that contract sales in 2010 soared 53% to 66.2 million yuan.

Industrial and Commercial Bank of China edged up 0.7% to 4.29 yuan.

SAIC Motor Corp surged 3.2% to 15.48 yuan after saying it plans to invest 500 million yuan to set up an equity-investment unit.

Beiqi Foton Motor Co rose 0.91% to 23.34 yuan.