China Retail Sales Increase 15.8%; Inflation at 4.9%; Hang Seng Drops 1.6%

Devan Biswas
11 Mar, 2011
New York City

Stocks in Shanghai extended Japan losses after a massive earthquake hit northeastern Japan. Consumer price inflation in China increased 4.9% in February and industrial production in two-months to February rose 14.1% and retail sales growth declined to 15.8%.

[R]4:30 PM Hong Kong – Stocks in Shanghai extended Japan losses after a massive earthquake hit northeastern Japan. Consumer price inflation in China increased 4.9% in February and industrial production in two-months to February rose 14.1% and retail sales growth declined to 15.8%.[/R]

Stocks in Shanghai declined after the release of inflation data and ongoing worries in the Middle East and weaker than expected jobs report in the U.S.

Traders sold stocks after Japan was struck with 8.9 magnitude earthquake that triggered tsunami with waves as high as 10 meters.

The Shanghai Composite Index declined 0.8% to 2,933.80 and the CSI 300 index fell 1% to 3,247.38.

The Hang Seng index dropped 1.6% or 365.11 to 23,250. Earlier the index plunged to 1.8% after a massive earthquake struck in the northeastern Japan.

China said inflation in February was higher than expected. The consumer price index increased 4.9% from a year ago following the similar increase in January. The inflation data stoked worries that tightening bias will continue and more measures may be released to curb the price rise.

China’s statistics bureau also said that the change in inflation method did not have a material impact on the final data.

Central bank governor Zhou Xiaochuan said at a press gathering that China will continue to tighten liquidity and keep the inflation within its target range.

Producer price index rose 7.2% in the month after increasing 6.6% in January. The high wholesale price increase suggests that elevated consumer price increase is likely in the months to come.

Consumer prices rose 3.3% in 2010, ahead of government target of 3%.

The National Bureau of Statistics also said China’s retail sales in the first two months to February increased 15.8% to 2.9 trillion yuan or $441.7 billion. The consumption increase has declined after consumer confidence fell in recent months.

The statistics bureau also said industrial production increased 14.1% in the first two months to February. The growth in heavy industry was 14.4% and in light industry was 13.3% in the period.

Stock Movers

In Hong Kong trading China Overseas Land & Investment Ltd declined 3.3% to HK$13.44.

Property developers declined in Shanghai trading. China Vanke fell 2% to 8.30 yuan and Gemdale Corp droped 2.2% to 6.55 yuan. Poly Real Estate Group Co dropped 1.6% to 12.90 yuan.

Huayi Brothers Media Corp increased 2.5% to 29.03 yuan after the movie maker reported 77% increase in 2010 net income to 149 million yuan.

Cathay Pacific increased 1.5% in Hong Kong trading after crude oil prices edged lower in international markets.

HSBC Holdings Plc opened lower and dropped more in the late afternoon after a quake in Japan. The stock closed down 1% to HK$82.85.