Shanghai Plunges, HK Gains

Ivaylo
22 Jun, 2007
New York City

The Shanghai Composite Index plunged heavily on Friday on concern that the government may undertake tightening steps to cool down the fast growth of the market. In South Korea, the index plunged as news spread that the largest shareholder of Korea Exchange Bank had sold part of its stake in the bank. Japan also took a hit as property stocks and insurers declined. Hong Kong bucked the overall downtrend on strong perfomance from China Mobile.

[R]8:30AM Asia ends lower on bond yield fears, HK bucks trend and gains on China Mobile.[/R]

Asian markets finished lower on Friday. In China, the Shanghai Composite Index plunged 3.3% to end at 4,091. Stocks plummeted in the afternoon session with worries emerging that the central bank will hike borrowing costs over the weekend as inflation rose to 3.4% last month, a two-year high, according to the statistic bureau. Industrial & Commercial Bank of China Ltd., the biggest lender in the country, shed 2.1% and China Vanke Co., the biggest property developer, lost 2.8%.

The Nikkei 225 Average in Tokyo lost 0.3%to settle at 18,188. Property developers and insurers lost the most as higher rates raise operating costs for developers. Mitsubishi Estate declined 3.9%, and Mizuho Bank lost 1.9%. Chip-makers gained, on a jump in the prices of memory chips. Advantest gained 3.6%.

Korea Exchange Bank sank heavily, down 3.4%, as its largest shareholder sold a stake in the bank in South Korea. In Seoul, the Kospi Index shed 1.3% to 1,770. Other financials also dipped in sympathy with Kookmin Bank off 4% and Hana Financial Group shedding 1.7%. In Australia, the market ended almost flat. Australia''s benchmark index S&P/ASX 200 edged 0.1% lower to 6,382. Although financial stocks finished higher, Caltex pulled the market lower, dipping 10.4%.

HK bucked the trend and advanced. The Hang Seng Index gained 0.2% to close at 21,999. China Mobile lifted the index, soaring 2.8%, while profit booking weighed on oil stocks. Cnooc dipped 1.8% and Sinopec lost 1.4%.

[R]7:30AM NY – 6:30PM Mumbai Sensex ends lower in a highly volatile session.[/R]

The Sensex on BSE finished 31.88 points, or 0.22%, lower at 14,467.36.

The market-breadth was almost even as 1,274 stocks advanced, 1,280 declined and 86 were unchanged. Of the 30 stocks in the Sensex, 11 advanced, while all the rest declined. The turnover on BSE was Rs 5,302 crore, almost the same as Rs 5,307 crore on Thursday. On NSE, the turnover was Rs 9,521 crore, lower than Rs 10, 388 crore on Thursday.

Economic news

India’s wholesale inflation rate slowed to a thirteen-month low in the second week of June as the prices of food and especially fruit lentils and cereals decreased. Wholesale prices advanced 4.28% in the week ended June 9 from a year ago, down from 4.8% the previous week and also lower than estimates for inflation rate of 4.45% for the period.

The great interest in the second offering of shares by ICICI Bank kept the rupee on the rise for a second straight week. The rupee also advanced as Indian companies take out loans abroad as the interest rates in dollars are lower than those in rupees. The rupee gained 0.4% to 40.695 against the dollar this week.

The government today approved 36 proposals for special economic zones. Among those which were approved were 3 Navi Mumbai SEZs jointly offered by Reliance India chief Mukesh Ambani and Anand Jain.

Trading highlights

TCS was the most-active stock with a turnover of Rs 562 crore followed by Time Technoplast and Reliance Industries.

Advancers

Reliance Energy surged 5.3% to Rs 590. The company submitted a bid for the for the 4,000-mega watt Sasan ultra mega power project. The stock was also given a boost by the Bombay High Court decision on gas deliveries by Reliance Industries.

NTPC surged 1.7% to Rs 153 on the Bombay High Court’s decision, that Reliance Industries was not to sell the gas to be produced from one of its major blocks in the Krishna-Godavari basin to any other than Reliance Natural Resources and NTPC. Hindalco gained nearly 1.9% to Rs 170 on market talk that investors are raising their stock in the company.

Capital goods large-cap Hindustan Unilever advanced 1.2% to Rs 192 and housing finance company HDFC gained a 1.7% to Rs 1,880.

ICICI Bank was in great demand today but also saw high volatility. It rose 0.4% to Rs 954 after its second offering of shares attracted bids for more than nine times the offer size. The issue closed today.

Decliners

BHEL plunged 2.8% to Rs 1,440, while cement stocks declined on heavy selling pressure. Gujarat Ambuja Cement dipped 2.6% to Rs 116, ACC was off 0.6% to Rs 85 and Grasim lost 0.5% to Rs 2,495.

Index heavy Reliance Industries lost 1.7% to Rs 1,704, on a petition by RNRL to the high court which had ordered yesterday after trading hours that the 81.6 million cubic meters of gas per day could be sold only to RNRL or NTPC.

The rise in the rupee impacted IT stocks negatively. Satyam Computers lost 1.1% to Rs 462, TCS was down 0.4% to Rs 1,140, Infosys declined 0.3% to Rs 1,951, and Wipro dipped 1.3% to Rs 517.