Shanghai Stocks Decline 1.3%; CNPC Net Surges 30%

Chandrasekhar Atreya
14 Jan, 2011
New York City

Shanghai stocks drop to their lowest level in ten days led by commodities and banks. Shougang Group shuts its steel plant in Beijing to cut air pollution levels. CNPC says its net profit for 2010 surged by 30%. China overtakes U.S with the largest installed wind power capacity.

[R]5:00 PM Hong Kong, China – Shanghai stocks drop to their lowest level in ten days led by commodities and banks. Shougang Group shuts its steel plant in Beijing to cut air pollution levels. CNPC says its net profit for 2010 surged by 30%. China overtakes U.S with the largest installed wind power capacity.[/R]

Shares in Shanghai fell to their lowest level in ten days as commodity shares tumbled and banks fell amid talks of possible interest rate hike over the weekend.

The Shanghai Composite Index lost 1.31% or 37.03 to 2,790.68 and for the week lost 48.12 or 1.7%. The CSI 300 Index lost 1.58% or 49.54 to 3,091.74 and fell 74.88 for the week or 2.36%.

The Hang Seng Index in Hong Kong added 0.18% or 44.25 to 24,283.23 and gained 596.6 or 2.52% for the week.

Shougang Group, a leading steel maker in China, announced on Thursday it had halted all its steel-making operations in Beijing amid efforts to cut air pollution in the capital.

A ceremony to mark the shutdown was held on Thursday morning at the factory site in west Beijing, halting output at the plant that was founded almost a century ago and had an annual production capacity of 8 million tons.

A 15% increase in crude oil prices and its fast rising overseas production boosted China National Petroleum Corp’s profit by 30% in 2010.

The company’s profits grew to 167.6 billion yuan in 2010 from 128.6 billion yuan in 2009, the company reported on Thursday. The company operates in about 30 countries and usually partners local firms under production sharing agreements.

China in 2010 became the country with the most installed wind power capacity replacing the United States.

China installed 16 gigawatts of new wind power capacity in 2010, a 62% annual increase, taking its total installed capacity to 41.8 gigawatts, said Li Junfeng, Secretary General of Chinese Renewable Energy Industry Association.

The United States installed about 5 gigawatts of new wind power capacity in 2010, taking its total installed capacity to 40.2 gigawatts, according to the Global Wind Energy Council.

China will allow domestic companies to use the yuan to settle direct outbound investment under a pilot program as it seeks to internationalize the currency and liberalize its capital account. Meanwhile, the People’s Bank of China set the yuan’s central parity rate at a record high since it de-pegged the currency from the U.S. dollar.

“The overseas direct investment yuan settlement will help expand the yuan’s influence and support companies to go overseas,” the People''s Bank of China said on Thursday in a statement on its Web site.

Confirming a bright outlook for the global economy in the short-term, the World Bank warned on Thursday that excessive capital flowing into emerging markets may hamper economic expansion in the long run.

President Hu Jintao is facing a sharp rise in inflation at home ahead the meeting with U.S. President Barack Obama in Washington next week.

Chinese officials may seek to speed up gains in their currency to fight inflation lowering the cost of imported goods into China.

“Fundamental forces that are pushing Chinese productivity growth are pushing inflation higher and will bring about necessary adjustments in exchange rates,” said Geithner while speaking in Washington on January 12.

Stock Movers

Jiangxi Copper plunged 8.04% to 38.57 yuan and Yunnan Copper dropped 7.49% to 24.70 yuan as the price of copper dropped for the second day in London.

Industrial Bank Co lost 2.65% to 26.09 yuan and China Everbright Bank was also down 2.44% to 3.99 yuan.

IT shares, which led the market higher on Thursday, were among the worst players today.

Shanghai Baosight Software Co sank 6.17% to 3.99 yuan.

Jiangsu Lianhuan Pharmaceutical Co surged the daily cap of 10% 18.33 yuan.