China Inflation at 4.9%, Stocks Flat; Anhui Conch Surges

Devan Biswas
15 Feb, 2011
New York City

Stocks in Shanghai closed flat and in Hong Kong declined on the worries that more rate tightening may be needed to stem the inflation. The January inflation rose 4.9%, less than expected on the change in index weights on fast rising food prices. Cement makers gained on higher demand expectation.

[R]5:30 PM Hong Kong – Stocks in Shanghai closed flat and in Hong Kong declined on the worries that more rate tightening may be needed to cool the inflation. The January inflation index rose 4.9%, less than expected on the change in index weights on fast rising food prices. Cement makers gained on higher demand expectations.[/R]

Latest inflation measure in China showed lower than expected inflation in January.

The consumer price index increased 4.9% in January after rising 4.6% in December. However, economists also noted that the change in the inflation basket and lower weighing of fast rising food articles also affected the inflation.

Without the change, inflation data would have shown an increase of more than 5%.

The sharp increase in food prices and continued price increase in commodities and drought conditions are stoking inflation worries in China. Central bank is expected to increase rates to stem rising inflation and increase reserve ratios.

The agriculture prices are the source of much of inflation in China and as the world food prices rise inflation pressures build.

The Shanghai index closed unchanged at 2,899.24 and the Shenzen Composite Index closed flat at 1,261.60.

Hang Seng index declined 221.28 or 1% to 22,899.78 and trading volume declined to HK$67.75 billion from HK$78.2 billion.

Stock Movers

Resource linked stocks closed higher after copper traded at a high in London Metal Exchange at 76,950 a ton.

Jiangxi Copper gained 3.2% to 42.34 yuan and Aluminum Corp of China added 4.3% to 11.38 yuan. Jiangxi rose after overseas shipment increased 38% from a year ago

Brokerage stocks declined. Sinolink Securities declined 2.4% to 15.61 yuan after rising as much as 7.5% on Monday.

Citic Securities increased 10% to 13.83 yuan and Haitong Securities climbed 9.4% to 10.37 yuan and China Merchants Securities Co surged daily limit of 10% to 20.15 yuan.

Cement makers rose sharply on the news that the demand in the year is expected to increase to 2.1 billion tons from 1.87 billion tons in 2010.

Anhui Conch Cement Co rose 8.3% to 33.77 yuan and Huaxin Cement Co soared 10% to 36.33 yuan.

Air China gained 3.9% to 12.20 yuan and China Southern Airlines Co added 3.9% to 8.99 yuan.