President Hu Jintao Begins U.S. Visit; Shanghai Index Gains 1.9%

Chandrasekhar Atreya
19 Jan, 2011
New York City

Shanghai and Hong Kong stocks gained more than 1%. President Hu Jintao began his four-day U.S. trip as trade and defense talks top the agenda. China cuts its U.S treasury holdings to 895.6 billion in November.

[R]5:00 PM Hong Kong, China – Shanghai and Hong Kong stocks gained more than 1%. President Hu Jintao began his four-day U.S.trip as trade and defense talks top the agenda. China cuts its U.S treasury holdings to 895.6 billion in November.[/R]

The Shanghai Composite Index closed 1.86% higher or 50.28 to 2,759.26 and the CSI 300 Index gained more at 2.27% or 67.46 to close at 3,045.10.

The Hang Seng Index in Hong Kong closed 1.1% higher or 265.64 to 24,419.62.

China was a net seller of U.S. Treasury bonds in November, reducing its holdings but still the largest foreign holder, according to data released by the Treasury Department on Tuesday.

China’s holdings fell by $11.2 billion to $895.6 billion, following net buying of more than $23 billion in October, its largest position in nearly a year. The total reserves of China at the end of 2010 were $2.85 trillion.

Hu Jintao, the Chinese President, began his four day visit on Tuesday as trade and defense are on the agenda between the largest economies of the world.

China plans to cut lending by up to 10% in 2011 and is also studying punitive measures to penalize lenders with “excessive lending,” the China Securities Journal reported on Tuesday, citing unidentified bank sources.

The newspaper said the lending in 2011 will range from 7.2 trillion yuan to 7.5 trillion yuan.

Wuhan Iron & Steel Co will pay C$120 million for iron ore assets in Canada.

Wuhan Steel, also known as WISCO, reached an agreement with Adriana Resources Inc to acquire 60% stake in a joint venture formed to develop Adriana’s Lac Otelnuk and December Lake iron ore properties in Quebec in Canada.

China will continue to face severe challenges managing its massive and growing foreign exchange reserves to prevent risks arising from inflow of more hot money, the regulator cautioned on Tuesday.

A growing trade surplus is expected to boost the nation’s forex reserves, which were already the world’s largest at $2.85 trillion by the end of 2010, over the next five years, Yi Gang, head of the State Administration of Foreign Exchange, said in his remarks published on the agency’s Web site.

Hong Kong’s seasonally adjusted jobless rate dropped to 4% between October-December from 4.1% between the period September to November, helped by sustained economic growth and job gains, the Census and Statistics Department said Tuesday.

The drop was mainly seen in the construction, education, repair, laundry, domestic and other personal-service activities sectors, the department said.

China’s consumer price index rose 4.6% in December, slowing from 5.1% in November, the Hong Kong-based Phoenix Television reported on its Web site, citing a source from the central bank. The report also noted that China’s GDP expanded 10.3% last year.

Stock Movers

High speed railway firms surged after media reports said that they are likely to bid for railway project in the United States.

Jinxi Axle Co surged the daily limit of 10% to 16.92 yuan. Both CNR Corp and CSR Corp, two leading railcar producers in China, surged by 10% after South China Morning Post said that the two companies are close to winning bids in the U.K.

Coal producers rose as demand remained high and supply remains constrained from Australia.

Datong Coal Industry Co climbed 3.1% to 19.45 yuan. China Shenhua Energy Co, the largest coal producer of China, added 1.59% to 24.10 yuan.