Hong Kong Fell for the Second Day

123jump.com Staff
03 Jan, 2008
New York City

Hong Kong stocks declined for the second day in a row in the new year as investors worried that a U.S. economic slowdown coupled with rising commodities prices will hurt the global economy. Hang Seng index fell 2.5% or 673.24 to 26,887.28. Gold mining companies rose but oil explorer and refiners fell despite a sharp rise in oil prices. Sinoma and China Communication jumped. Singapore Air is reported have refused to raise its offer for China Eastern.

[R]8:00AM New York, 8:00PM Hong Kong – Hong Kong stocks fell for the second time in a row. Gold producers limit loses as price steadies below the record $860 an ounce.[/R]

Stocks in Hong Kong fell for the second consecutive trading day of the year on fears that the weakening U.S. economic growth will widen credit market losses.

In Hong Kong trading Hang Seng Index declined 2.44% or 673.24 to 26,887.28, while the China Enterprises Index of Hong Kong-listed mainland companies fell 3.39% to 15,464.66.

The financial markets in Japan were closed today and will reopen for the first time in 2008 on Friday.

Daily turnover crossed HK$47.36 billion by mid-day against HK$43.88 billion in the previous session.

The U.S. Institute for Supply Management manufacturing index in December slipped to 47.7, the lowest since April 2003 suggesting that the manufacturing activities declined in the month. The report sparked a wide sell-off in U.S. trading and major indexes lost more than 1.5%.

Gold producers rose after the price rose to record highs at $860.10 an ounce yesterday. Zhaojin Mining increased 5.8%, Zijin Mining rose 1.5%, and Sino Gold climbed 9.3%.

Construction companies also added to yesterday’s gains on expectations solid economic growth will continue in China. China Communications Construction rose 2.3% and Sinoma spiked 5.9%.

Oil companies fell despite the 4.2% price increase to $100 per barrel in international markets. Sinopec fell almost 4%, PetroChina shed 1.9% and CNOOC slipped 0.76% percent.

PetroChina fell on reports of expected delays, by almost a year of a new 100,000 barrels-per-day refinery in China''s remote northwest, to late 2008 due to construction complications.

The Standard reported today that Singapore Airlines spokesman Stephen Forshaw says the company is not prepared to raise the offer price for a 24% stake in China Eastern Airline after shareholder China National Aviation Corp said on Tuesday the subscription price of HK$3.8 per share doesn’t reflect the fair value of the company.

Forshaw reportedly told newswires “it is the maximum justified on business fundamentals”, adding that Singapore Airlines was a long-term partner rather that a short term trader and China Eastern stands to benefit from the business alliance.

Separately, the Wall Street Journal Asia reported that CNAC will vote against the proposed acquisition by Singapore Airlines and its parent company Temasek Holdings at a shareholders meeting on January 8.

China Eastern shares closed the morning session down 7.5% and Air China tumbled nearly 9% on expectations it might be used to bankroll a counter bid by CNAC.

Bloomberg news reported today PricewaterhouseCoopers announced yesterday the value of IPOs in China will grow from Rmb 63 billion last year to Rmb 480 billion as more companies traded in Hong Kong are allowed to sell shares to the nation’s bourses.

IPOs in Hong Kong are projected to raise 5% less this year at HK$280billion.

China Petrochemical Corporation Chairman Su Shulin said on the company’s Website yesterday that the company will acquire more foreign oil and gas assets in order to make it a global competitor.

In addition, Sinopec, a unit of China Petrochemical Corporation has bought 60,000 tons of spot gasoline for January and will not export any oil products for the second successive month.

Beijing announced last week that it will halve fuel import tax on gasoline, diesel and kerosene to 1% this year and will waive its 17% value added tax on diesel imports from December and March to augment domestic fuel supplies.


[R]5:00AM New York, 9:00PM Sydney - ASX 200 index declined 1% after broader market worried about the U.S. economy.[/R]

ASX 200 index lost 1% or 62.50 to close at 6,290.70.

The Preliminary market turnover was 1.33 billion, worth $3.56 billion, with 460 stocks moving up, 725 moving down, and 312 unchanged. The most actively traded stock was Retail Star with 131.7 million shares worth $3.3 million.

National Australia Bank Ltd. led lenders lower on the prospect that slowing U.S. economic growth will worsen the current credit-market crisis. Westfield Group lost 4% and News Corp declined 3.7%. The U.S. markets in the overnight trading declined more than 1.7%.

Newcrest Mining Ltd. jumped to a record as gold prices rose to a three-decade high of $860 an ounce. Gold traded in 1978 at $873 an ounce.

Newcrest Mining Gold extended a seven-day rally as the U.S. dollar weakened, boosting the appeal of the precious metal as a hedge against inflation. Bullion for February delivery recently traded at $858 an ounce, after rising to a record $860.10 an ounce yesterday.

Newcrest Mining added 10.2% and Lihir Gold Ltd was up 5.8%. Woodside gained 1.6%, Oil Search added 3.3% and Santos was up 2.8% after crude oil rose to $100 a barrel for the first time in New York as global fuel consumption threatens to outpace production.

Crude oil rose $3.320 to close at $99.30 per barrel for a front month contract in New York Mercantile Exchange trading, natural gas increased 37 cents to $7.859 per mBtu, and gasoline futures increased 7.22 cents to close at 256.30 cents per gallon.

Crude oil futures in the U.S. trading crossed a previous intra-day high $99.29 on the rising worries that the U.S. weekly inventory report due to be released tomorrow will show another decline in inventories and growing violence in Nigeria. Natural gas and heating oil rose nearly 5% on the harsh winter in the North East region of the U.S.

Separately, Woodside and Santos resumed production at their oil fields off the northwest coast of Australia yesterday after they were shut down by a tropical cyclone.

Woodside Petroleum Ltd. climbed as oil traded near $100 a barrel.

Qantas today ruled out possibilities of it importing temporary skilled workers to break the effect of a looming strike by 1,700 of its maintenance workers. The new Immigration Minister Chris Evans issued a strongly worded a message that the Labor Government will not tolerate the temporary skilled migration scheme.

Qantas has been grappling with a series of contingency plans to reduce the impact of the industrial action but it has been dogged by reports that it had been considering importing foreign engineers on so-called 457 temporary work visas to replace the striking workforce and keep flying next week.

The Australian Licensed Engineers Association (ALAEA) wants Qantas to agree to a 5% pay rise but the company is offering 3% with another 1% in superannuating. Qantas could potentially source engineers from Jetstar but this may not be enough. Qantas'' share shed 0.2%.

Centro Properties Group share gained 7.7% today after unconfirmed media reports that Blackstone Group and Citadel Investment Group may consider bidding for Centro’s properties. AMP Ltd. and DB Trust have also expressed interest.

Centro put itself on the market when it announced yesterday that it is willing to sell all its assets including its 700 malls in the United State as it struggles to raise money to refinance its $3.9 billion (US$3.4 billion) of debt. The Group also invited bids for stakes in his Australian and U.S. wholesale fund management and distribution which Centro values at $3.7 billion.

Centro Properties lost more than 80% of its market value as a result of the announcement.



The Australian dollar traded at $0.8831/34, up from yesterday''s close of $0.8797/00.

Of the ASX 200 index shares, Sino Gold Mining led the gainers with a rise of 13.4% followed by increases in Newcrest Mining of 10.2%, in AED Oil Limited of 7.9%, in Centro Properties of 7.7%, and in Nexus Energy Limited of 6.9%.

Of the ASX 200 index stocks APN/UKA European led the decliners with a fall of 7% followed by losses in Timbercorp Limited of 5.3%, in Bradken of 5.2%, in Goodman Group of 5.2 and in Valad Property of 5.1%.

In the media sector Consolidated Media Holdings was down 1.9%, News Corp lost 3.7%, and Fairfax Media declined 1.3%.

In other sectors resource stocks were down with BHP Billiton declining 0.5% and Rio Tint shedding 1.8%. In the banking sector, ANZ shed 0.9%, Westpac lost 1.7%, Commonwealth Bank of Australia declined 1.8% and the National Australia Bank lost 1.4%.

Retailers stocks were mixed, with Wesfarmers gaining 0.5%, Woolworths losing 0.9% and David Jones declining 2.4%.