China Indexes Rise, Fuel Prices Hiked; Alibaba.com Chief Forced Out

Marcus Jacob
21 Feb, 2011
New York City

China indexes closed higher despite the increase in bank reserve ratios over the weekend. China lifted fuel prices for the first time in the year. Banks and airlines declined. The Shanghai index rose 1.1% and the Shenzhen benchmark index gained 2.1%.

[R]5:00 PM Hong Kong – China indexes closed higher despite the increase in bank reserve ratios over the weekend. China lifted fuel prices for the first time in the year. Banks and airlines declined. The Shanghai index rose 1.1% and the Shenzhen benchmark index gained 2.1%.[/R]

Stocks in China region closed higher as energy prices in Asian trading rose as the tensions in the Middle East spread to oil producing nations. Protesters in Libya demonstrated for the second week and first protests were conducted in Morocco.

G-20 group of nations agreed to a broad of set of indicators to monitor and prevent the next financial crisis.

The indicators that track rising global imbalances and monitor investment flows will be used as an early warning system. The indicators include external debt, budget deficits and private savings rate but will not have current account surplus and foreign exchange reserves as China resisted their inclusions.

The Shanghai Composite Index rose 1.12% or 32.45 to 2,932.25 and the Shenzhen Component Index increased 2.06% or 259.35 to 12,872.47. Hang Seng Index declined 0.5%.

Over the weekend, China increase bank reserve requirements second time this year and eight times in the last fourteen months to stem the rising inflation.

China hiked prices of jet fuel and automotive fuel prices over the weekend to reflect the rise in international prices. The National Development and Reform Commission increased gasoline prices by 4.1% and diesel prices 4.5%. Jet fuel prices were lifted 5.8%.

Alibaba.com chief executive and chief operating officer resigned after company internal investigation showed an increase in fraudulent transactions.

In a filing with the Hong Kong Stock Exchange, Chairman Jack Ma said that there were 1,219 fraud cases 2009 and 1,107 in 2010 with the average value of less that $1,200 per case.

The online marketplace leader also noted that neither chief executive David Wei Zhe nor chief operating officer Lee Shi-huei Elvis were personally involved in any of the cases and the company has so far paid out $1.7 million to 2,249 customers from its Fair Play Fund.

Stock Movers

Alibaba.com declined 3.7% and the chief executive’s resignation was released after the close.

Airlines declined after China increased fuel prices.

Banks declined after China lifted reserve requirements on Friday. Industrial & Commercial Bank of China Ltd declined 0.7% to 4.30 yuan and Bank of China decreased 0.3% to 3.28 yuan.

China International Travel Service Co. Ltd increased 7.6% to 29.57 yuan after China’s Vice Premier Wang Qishan urged the tourism industry to carry out fast development.

PetroChina Co Ltd gained 1.1% to 11.71 yuan and Sinopec increased 1.4% to 9.27 yuan.

China State Construction Engineering Corp increased 1.3% to 3.70 yuan after it said it signed construction signed contracts increased 81% from a year ago to 42.8 billion yuan.
ZTE Corp rose the daily limit of 10% to 31.42 after the telecom equipment maker and others increased on the hopes of higher spending to develop broadband networks.