China Trade Surplus Rises 48%

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

China reported that 2007 trade surplus rose 48% to $262.2 billion on the back of global trade volume increase of 23.5% to $2.17 trillion. Exports rose 25.7% and imports increased 20.8%. Hang Seng Index in Hong Kong fell 1.3% or 363.85 to 26,867.01, a decline of 2.4% for the week. Telecommunication stocks rose after China Mobile merged with China Tietong Telecom. Refiners, property, and financial stocks declined in Hong Kong.

[R]6:00AM New York, 6:00PM - Hong Kong stock index closed down 2.4% for the week. China world trade rose 23.5% in 2007 and trade surplus in the year increased 48%.[/R]

Stocks in Hong Kong tumbled on worries that the subprime related losses will widen following a report Merrill Lynch might suffer more write-downs. The ongoing housing market correction has forced several large banks and brokers to seek additional capital from Middle East and China.

In Hong Kong trading the Hang Seng index fell 1.3% or 363.85 to 26,867.01, a decline of 2.4% for the week.

The China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies fell 1.2 %, or 193.94 to 15,833.75, down 0.4% for the week.

Daily turnover on main board was HK$128.7 billion compared to HK$123.3 billion a day ago.

The New York Times reported yesterday that Merrill Lynch might report $15 billion more in write-downs, twice the previous estimate.

Xinhua News Agency reported yesterday that China’s trade surplus rose 48% to $262.2 billion, while the surplus for December narrowed to $22.7 billion from $26.2 billion in November.

Total trade in 2007 rose 23.5% to $2.17 trillion and trade surplus rose to $262.2 billion in 2007 from $177.47 billion in 2006. In 2007, exports rose 25.7% to $1.22 trillion, and imports climbed 20.8% to $955.8 billion, according to the administration.

The export growth was 1.5% points lower than in 2006 and import rose at 0.9%.

The total bi-lateral trade with the U.S rose 15% in 2007 from 2006 to $302.08 billion.

U.S. Federal Reserve Chairman Ben Bernanke in a speech in Washington hinted the risks for the economic slowdown has substantially increased in the last few months.

He further added, “Financial conditions continue to pose a downside risk to the outlook for growth. Market participants still express considerable uncertainty about the appropriate valuation of complex financial assets and about the extent of additional losses that may be disclosed in the future.

On the whole, despite improvements in some areas, the financial situation remains fragile, and many funding markets remain impaired. Adverse economic or financial news has the potential to increase financial strains and to lead to further constraints on the supply of credit to households and businesses.”

Telecommunications stock rose after South China Morning Post reported the Chinese government had approved the merger of China Mobile Limited with fixed line operator China Tietong Telecommunications Corporation.

The restructure is expected to be unveiled in April. China Telecom fell 5.1% to HK$6.64, while China Mobile declined 1% at HK$133.90.China Unicom, the country’s second largest wireless, however climbed 6.6% to HK$18.68.

Mainland developers also plummeted despite the approval yesterday by the China Securities Regulatory of the initial public offering of Hefei City Construction and a share placement of Finance Street Holding.

Declining oil prices dragged refiners lower. Sinopec Corp lost 2.6% to HK$10.48 as a result.

Financial stocks declined on the worries of the U.S economy. HSBC Holdings dropped 2.5% to a two-year low at HK$123.6.

Li & Fung, which manufactures products to Wal-Mart and other discount retailers, plunged 6% to HK$25.35 after the weak same store sales increase in December in the U.S. Esprit, based in Europe, fell 4.1% to HK$96.

Hong Kong Exchanges and Clearing also edged down 2.6% to HK$204.20.


[R]5:00AM New York, 7:00PM Tokyo - Retailers and realty stocks drag Tokyo down 1.93%.[/R]

Stocks in Japan fell as retailers cut profit estimates and fears of widening credit market losses affected investor sentiment.

In Tokyo trading Nikkei 225 declined 1.93% or 277.32 to 14,110.79, down 7.8% since trading resumed this year on January 4, while the broader Topix Index fell 1.7% to 1,377.58.

In the first section of the Tokyo Stock Exchange 11 billion shares worth 1.4 trillion yen were traded and in the second section 312 million shares valued at 3.6 billion yen changed hands.

Of the Nikkei 225 stocks 33 rose, 189 declined, and 3 were unchanged.

J Front Retailing led decliners in the index with a loss of 10.72% after it cut its full year net income forecast by 12% to 195 billion yen on lower than expected revenue.

Bank of Japan Talks

Bank of Japan Governor Toshihiko Fukui told a parliamentary committee in Tokyo today that Japan’s economic growth is slowing on the sharp decline in housing investment.

Fukui also added that core consumer prices are expected to increase on rising food and energy costs.

U.S. Federal Reserve Chairman Ben Bernanke also said yesterday that the downside risks to economic growth have become pronounced in 2008 and further cuts may be necessary.

The New York Times reported yesterday that Merrill Lynch might report $15 billion in write-downs, twice higher than the previous estimates.


Mergers and Capitalization Plans

Nikkei news online reported today that JFE Holdings Inc and IHI Corp are in talks to create Japan’s largest shipbuilding company to compete with Chinese and South Korean yards as early as this year.

According to the reports, IHI shipbuilding unit IHI Marine United Incorporated will be merged into JFE Universal Shipbuilding Corporation. JFE will also raise its stake in JFE Universal Shipbuilding Corporation from 50% to 80%.

The new company will have sales estimated at 345 billion yen. JFE Holdings slipped 0.55%, while IHI Corp climbed 1.40%.

The Japan Times online publication reported today that Japan Airlines Corporation is seeking a capital injection totaling 60 billion yen from its four major creditor banks as part of 150 billion yen capital increase plan.

The banks include the Development Bank of Japan, Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation.

Index Movers

Of the Nikkei 225 index shares Nichirei Corp led advancers with a rise of 7.43% followed by gains in Clarion Company Limited of 3.79%, in Trend Micro Incorporated of 2.43%, in NGK Insulators of 2.36%, and in Mitsui Sumitomo Insurance Company Limited of 2.30%.

Sharp Corporation and Matsushita Electrical Industrial Company rose after Nomura Holdings raised its rating on the stocks to “buy” from “neutral”. The stocks rose 2.16% and 0.93% respectively.

J Front Retailing led decliners of the Nikkei 225 index shares with a drop of 10.72% followed by losses in Sumitomo Heavy Industry of 8.32%, in Tokyu Land Corp of 7.59%, in Sumitomo Realty of 7.26%, and in Nippon Sheet Glass of 7.10%.

Aeon Company Limited also slipped 5.45%.


Earnings Update

J Front Retailing fell after it cut its full year net income forecast by 12% to 195 billion yen. Seven & I Holdings declined 6.33% after it lowered its net income forecast by 12% to 127 billion yen on costs associated to introducing an electric payment system at its convenient stores.

Asian Markets Update

In Tokyo Nikkei 225 Index closed lower 277.32 or 1.93% to 14,110.79, in Hong Kong Hang Seng index decreased 363.85 or 1.34% closed to 26,867.01, in Australia ASX 200 index lower 97.10 or 1.60% to close 5,981.60.

In South Korea Kospi Index decreased 42.51 or 2.33% to close at 1,782.27, in Thailand SET index closed lower 3.71 or 0.46% to 796.47. Sensex index in India increased 245.37 or 1.19% to 20,827.45. Market of Indonesia was closed today.