China Region Stocks Drop; China Property Curbs Expanded

Chandrasekhar Atreya
24 Jan, 2011
New York City

Shanghai and Hong Kong indexes lose on liquidity concerns ahead of Lunar New Year day. China

[R]5:00 PM Hong Kong, China – Shanghai and Hong Kong indexes lose on liquidity concerns ahead of Lunar New Year day. China’s economy is expected to expand 9.8% in 2011 with 3.7% inflation. China Petroleum & Chemical Corp crude oil production and refining rose sharply in 2010.[/R]

Shanghai Index ended lower today due to tight liquidity amid strong demand for cash ahead of the New Year holiday. Metal stocks fell on a report that China may scrap export tax rebates on more items. Banking stocks also declined.

The Shanghai Composite Index closed 0.68% lower or 18.58 down to 2,696.72 and CSI 300 Index fell 0.96% or 28.54 to end up at 2,954.92.

The Hang Seng Index in Hong Kong lost 0.31% or 75.08 to close at 23,801.78.

China’s economy is expected expand in 2011 with a growth of 9.8% and inflation of 3.7%, according to a report by the government think tank Chinese Academy of Science’s report.

Despite the central government’s efforts to rein in the market, the academy said that housing prices could rise as much as 13% this year on high demand and lack of adequate supply.

China is expanding the list of places where households will be limited to two properties. Sixteen largest cities, including Shanghai, Beijing and Shenzhen, have announced the policy and more cities in second and third tier are expected to follow suit.

These would include places such as Zhengzhou in Henan Province, Kunming in Yunnan Province and some cities in the Guangxi Zhuang Autonomous Region and Shaanxi Province, China Times reported.

Industrial and Commercial Bank of China agreed to acquire a majority stake in the Bank of East Asia’s United States unit, making it the first Chinese lender to buy into a U.S. retail bank, the Wall Street Journal reported.

ICBC and Bank of East Asia were mentioned in a preliminary list of companies expected to participate in a contract signing ceremony at the U.S.-China Trade and Economic Cooperation Forum on the last day of the Chinese President Hu Jintao’s visit to the U.S.

China Petroleum and Chemical Corp also known as Sinopec said on Friday that it processed 211 million tons of crude oil in 2010, up 13.16% from a year ago as the economy grew at a faster pace than expected.

The company produced 330 million barrels of crude in 2010 and also produced 10.5% more diesel and 19.54% more kerosene to cope with surging demand as the government rationed electricity to meet energy-saving goals.

China Investment Corp, the country’s sovereign wealth fund inaugurated its first foreign representative office in the Canadian city of Toronto to expand its international business operations.

The new office will enhance long-term cooperation with business partners and exploring new areas and opportunities for investment in Canada, company Chairman and CEO Lou Jiwei said last Thursday.

The total domestic assets of financial institutions in the banking sector rose 19.7% in 2010 from a year ago to 94.3 trillion yuan, the country’s banking regulator said on Friday.

The term financial institutions in the banking sector refers to commercial banks, deposit taking urban and rural-credit cooperatives and policy banks and their combined liabilities rose 19% in 2010 to 88.4 trillion yuan from a year ago, the China Banking Regulatory Commission said.

China has ordered extra efforts to keep road and rail links open as snow and freezing rain have threatened to keep millions of travelers at bay during the annual Lunar New Year festival during February 2 to February 8.

Stock Movers

Yunnan Chihong Zinc & Germanium Co dipped 8.3% to 26.27 yuan and Tonglin Nonferrous Metals Group dropped 5.7% to 25.75 yuan.

China Aluminum Co fell 1.69% to 10.42 yuan.

ICBC fell 0.71% to 4.19 yuan while China Construction Bank fell 1.1% to 4.67 yuan. Agricultural Bank of China Ltd fell 1.2% to 2.59 yuan.

Sinopec gained 1.2% to 8.80 yuan after reporting profits may exceed 100 billion yuan.

China Railway Construction Corp surged 3.6% to 7.43 yuan.