Shanghai Advance, Hong Kong Edge Lower

123jump.com Staff
25 Jul, 2007
New York City

Stocks in Shanghai advanced to a new high on better than expected earnings from airlines and renewed buying in bank and financial services stocks. Hong Kong closed a fraction lower dragged by banks and oil companies. Aluminum companies soared to the daily limit of 10% on the speculation that metal prices will rise. HSBC continues to trade lower on sub-prime worries. New brokerage accounts in the first three weeks in July jump 30% from a year ago in China.

[R]8:00AM New York, 8:00PM Hong Kong – Shanghai index climbs to a record and Hong Kong closed a fraction lower.[/R]

Asian markets decline following sharp declines in Europe and America in the overnight trading. Philippines led the region with a loss of 1.6% followed by 1.2% decline in Australia, 0.8% decrease in Japan, and 0.6% fall in India. Hong Kong edged 0.5% lower but Shanghai advanced 2.7%.

In Hong Kong Hang Seng Index lost 110.7 to close at 23,362.18 and CSI 300 Index in Shanghai closed up 2.3% to 4,255.46 and Shanghai Composite Index jumped 2.7% to 4,323.97.

Airlines stocks soared on the earnings news. China Southern Airlines surged 9%, Hainan airlines jumped 2.6% lifted on the news that Air China earnings surged on higher demands for its international flights. The company stock jumped 7% on earnings growth of 20-fold.

Baotou Aluminum surged 9.9% and Aluminum Corp of China jumped 9.3% on the speculation that aluminum prices will gain in the coming months.

Industrial and Commercial Bank of China, the largest bank in China, jumped 2.6% in sympathy with the broader market rise. The recent rise in the stock has lifted its market value to the largest bank in market capitalization in the world.

Shanghai Automotive jumped 4.8% after it said that it plans to issue convertible bonds to expand its production and hunt for acquisition in the overseas market. The 8 billion yen bond is likely to be priced before the end of the year. Huaneng Power surged 10% after Goldman Sachs upgraded the stock.

Exposure to sub-prime lending in the U.S. left HSBC lower 1% in Hong Kong trading. Lower oil price in the region dragged CNOOC 3% lower. Property stocks held steady but telecom and retail stocks edged a fraction higher.

[R]6:30AM New York, 6:30PM Tokyo – Oil complex stocks and leading exporters lead a sell-off in Tokyo. Shipping companies recover at close[/R]

In Tokyo trading Nikkei 225 fell 143.61 to close at 17,858.42 on weak oil and sharp fall in New York trading. The index recovered from its mid-day trading losses of 1.5% to close only 0.8% lower.

Nintendo stock rebounded 6% from a loss of 2.5% to 3.5% at close during the day. Nintendo reported first quarter earnings of 80.3 billion yen from 15.6 billion a year ago and revised its annual earnings projection to 245 billion. The sharp revision in earnings 41% from an earlier projection lifted the stock and trading sentiment in the market. Nintendo also pays out high percentage of its earnings in dividend.

Nomura Holdings reported first quarter earnings of 76.7 billion yen compared to 20.1 billion yen from a year ago on higher asset under management and profits in stock trading. The boom is assets to manage retirement accounts in mutual funds helped the largest securities company to reach 30 trillion yen in assets under management. The investment management fees rose 47.3 billion from 29.7 billion and trading and brokerage commissions jumped to 113 billion from 79.6 billion.

Mistukoshi jumped 7% after Nikkei newspaper reported that the company may be exploring merger or other recapitalization plans.

Shipping companies closed higher after facing a sell-off in the morning trading. Kawasaki Kisen Kaisha closed up 2.7% followed by 1.4% gain in Mitsui O.S.K. Lines, and 1.3% in Nippon Yusen K.K.

Victor Company of Japan, popularly known as JVC, unit of Matushita declined 10% on the news that the company has agreed to acquire Kenwood. The worries of earnings dilution hurt the stock.

Lower oil dragged oil trading and refining companies at close. The refiner, Nippon Mining Holdings dropped 2.8% and Nippon oil fell 4%. Inpex, the largest oil explorer edged 3.2% lower.