Hong Kong Stocks Participate in China Surge

123jump.com Staff
04 Feb, 2008
New York City

Stocks in Hong Kong rebounded after a surge of 8.1% in Shanghai market. Financials, metals, and banks rallied. In Hong Kong trading Hang Seng Index rose 3.8% or 908.50 to 25,032.08, and China Enterprises Index gained 6.29% to 14,120.84. The indexes gained after China Composite rebounded to 8.13% or 351.4 to 4,672.17. The World Bank lowered its growth estimate for China to 9.6% from its previous forecast of 10.8%.

[R]6:00AM New York, 6:00PM Hong Kong - World Bank slashes China’s GDP forecast to 9.6% in 2008.[/R]

In Hong Kong trading Hang Seng Index rose 3.8% or 908.50 to 25,032.08, and China Enterprises Index gained 6.29% to 14,120.84. The indexes gained after China Composite rebounded to 8.13% or 351.4 to 4,672.17.

The surge in Shanghai reflected a change in investors’ mood after a week of heavy snow storms led delays, power cuts, lost production, and transportation during the important holiday season. Investors focused on recovery efforts of companies than on the loss from the weather related problems.

Daily turnover on main-board was HK$117.62 billion from HK$119.4 on Friday last week.

The World Bank reported in the China Quarterly Update released today lowered its China GDP growth for China to 9.6% in 2008 from the previously forecasted 10.8%. The report also added that the current global economic slow-down is less likely to affect growth in China due is its strong macro-economic position.

China National Institute of Economic Research economist Fan Gang said today the economic impact of the heavy snowfalls will “dissipate over the full year.” The Ministry of Civil Affairs last week said heavy snow that hit central and southern regions cost the country Rmb 53.9 billion.

According to the Bank, China’s economy will grow robustly this year.

Commented David Dollar, Country Director for China: “The slowdown in the global economy should affect China’s exports and investment in the international trade. However, the momentum of domestic demand should remain robust and a modest global slowdown could contribute to rebalancing of the economy.”

The report further noted that international food prices, wage cost pressures and inflation present a real risk for China, adding that the government must use its strong fiscal position to make direct subsidies and replace some of the price controls.

Alibaba.com rose 13.6% after news that Microsoft Corp made a takeover bid for Yahoo Inc for $45 billion. Yahoo has a stake in Alibaba.com which was recently listed on the Hong Kong stock exchange.

Industrial and Commercial Bank of China gained 3.9 % to HK$5.28 in today’s trade after weekend reports from Xinhua News Agency said the company has received approval from the South African government to purchase 20% stake in Standard Bank.

Chalco, a unit of Chinalco, extended gains from Friday last week after the parent company allied with Alcoa to buy a 9% stake in Rio Tinto.

Reuters news also reported that China Shenhua Energy rose 2.56% to HK$42.05 after a Hong Kong newspaper reported that its parent company China Shenhua Group is in talks with China Investment Corp to buy a 15.85% stake in Australia''s Fortescue Metals Group Ltd for an estimated $2 billion.

Retailer Espirit closed up 1.43% to HK$106.40 after chief executive Heinz Krogner told Reuters today that the company plans to grow annual sales by 30% in the next 10 years.

Ping An surged 12% to HK$62.30 on speculation it had shelved plans for its stock offering.