Shanghai Leads Asia Again

123jump.com Staff
03 Aug, 2007
New York City

Shanghai stock market has been on a tear and today was no different. CSI 300 and the Shanghai Composite advanced by more than 3.5%. Banks, financial brokerage, and property stocks led the advance. Lenovo Group in Hong Kong reported revenue rise of 13% and earninngs jump more than ten fold. China reported that its airoport and airline industry retunred to profitability at the of the last quarter. Daily new stock brokerage account averaged 122,000 in July.

[R]9:00AM New York, 2:00PM Frankfurt – Shanghai climbs the wall of worries to reach a record high.[/R]

Asian markets closed higher in the region on the bank of rising indexes in New York and European trading. Shanghai led the regions gainers for the second day with a rise of 3.5% followed by a gain of 1.2% in South Korea and Taiwan, 1% rise in India and Thailand. Hong Kong added 0.4% and Australia edged a fraction higher. Philippines led the decliners in the region with a loss of 0.2% followed by fractional losses in Japan and Indonesia.

In Shanghai trading CSI 300 rose 3.7% to close at 4,598.38, fourth higher close in a row this week. Rising stocks in financial and banking, property, and consumer sectors lifted the average. The 6.8% gain of the week lifted the average to a record high. The Shanghai Composite Index gained 3.5% to close at 4,560.77. China Vanke jumped 7%, Merchants Bank soared its daily limit of 10%, and Shanghai Pudong increased 6%. Citic Securities, the largest financial broker soared 10% as well. China reported that new daily account openings in the July month averaged 122,000.

Lenovo Group first quarter revenue jumped 13% to $3.9 billion and pre-tax net income before restructuring soared to $123 million or 258%. The net income jumped to $67 million or an increase of 1,184%. Diluted earnings per share increased to 76 cents from 6 cents a year ago. The sales in Greater China form 39% of total sales jumped 14% to $1.5 billion and sales in the Americas form 29% of total sales. PC sales in the region increased 15%. With 19% sales in the Europe, Middle East, and Africa sales increased 22%. Shipments in Asia including India jumped 12% forming 13% of global sales.

Airlines and Shanghai International Airport jumped on the news that the industry returned to profitability of 4.6 billion yuan from a loss of 350 million yuan a year ago. There are 133 airports in the country and domestic passenger traffic has been increasing at 15% or more for the last five years.

[R]7:00AM New York, 8:00PM Tokyo – Nikkei closed 1.8% lower for the week. After the close Toyota reports 32% rise in earnings on sales gain of 16%.[/R]

Nikkei 225 in Tokyo closed or 4.25 or 0.03% to 16,979.86. For the week Nikkei lost 1.81% and Topix lost 1.6%. Despite a week of widening credit problems in the U.S. markets in Asia and Europe stabilized. The yen jumped above 119 for a dollar helping export sensitive stocks.

Sumitomo Realty & Development Company jumped 4.5% after the company reported first quarter earnings gain of 54% to 30 billion yen. The net income increase at the company has tracked rising real estate values in Tokyo and other locations in Japan. Central Tokyo has seen prices gain sharply in the last one year on tight inventory supplies. Mitsui Fudosan and Mitsubishi Estates gained 1.5%. Mitsubishi Estate income jumped three times on higher condo prices in Tokyo.

Asahi Breweries, Ltd reported its first half revenue gain of 1.2% to 672.6 billion yen and ordinary earnings fall of 10.2% to 26.6 billion yen. Net income declined 5% to 13.7 billion yen from a year ago. Net income per share was reported at 29.12 yen. Net income margin for the first half declined to 2.1% from 2.2% a year ago. The company guided for the fiscal year 2007 ending in Dec 31, 2007 net revenue gain of 2.9% to 1.448 trillion yen and net income gain of 0.5% to 45 billion yen.

Furukawa Electric fell 6% after reporting earnings decline of 40% in the second quarter. The maker of plastics, metals, and optical products in the fiscal year 2006 reported net revenue of 1.1 trillion yen and net income of 30 billion yen on a net margin of 2.7%.

Kubota Corporation reported first quarter revenue increased 6.3% to 269 billion yen and net income gain of 7% to 24 billion yen. Earnings per share in the quarter were reported at 93 yen or 76 American cents per ADS. Revenue growth in the quarter declined to 6.3% from 13.7% from a year ago. The company guided for the next quarter revenue gain of 0.4% to 560 billion yen and net income decline of 16.5% to 37 billion yen. For the fiscal year ending in March 2008 the company expects to generate net revenue of 1.14 trillion yen and net income of 76 billion yen.

The stock has underperformed in the last one year compared to its peers in machinery companies in Japan and its global peers in farm and machinery equipment.

After the close of regular trading in Tokyo market, Toyota reported first quarter earnings ending June 30. The earnings in the quarter jumped 32.3% to 491.5 billion, operating income gained 31.8% and net sales increased 15.7% to 6.52 trillion yen. The consolidated vehicle sales in the quarter jumped to 2.16 million, a rise of 71,000 units or more than 3% increase from a year ago. Vehicle sales in Japan declined 43,000 to 500,000 units, in the U.S. sales increased to 15,000 to 762,000, and in Europe 25,000 to 333,000. Asian sales jumped 29,000 to 222,000 in the quarter.

The company guided for the year ending in March, 2008 total sales of 8.89 million units generating 25 trillion yen sales with operating income of 2.25 billion yen, and net income of 1.65 billion yen.