Stocks in Hong Kong Fell

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

Stocks in Hong Kong fell as worries related to subprime lending resurfaced and rising inflation in China. Producer price index in January in China surged 6.1% from a year ago on risig commodities and energy prices. China steel makers association reported that industry exported 54 million tons of steel and profit increased 45% to Rmb 190 billion on 15% rise in stell production.

[R]6:00AM New York, 6:00 PM Hong Kong - China’s producer prices increased 6.1% in January from a year ago.[/R]

Stock indexes in Hong Kong plummeted on profit taking after recent gains and on further worries on credit market losses after a ratings downgrade on bond insurer FGIC.

Market Sentiment

In Hong Kong trading the Hang Seng Index dropped 1.6%, or 389.18 to 23,759.25, and the China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, declined 1.5% to 13,630.25.

Daily turnover on main-board was HK$78.1 billion compared to HK$83 billion last week.

January Producer Price Inflation Increases

The People’s Daily online reported today that according to the National Bureau of Statistics the Producer Price Index surged 6.1% in January from a year ago.

Iron and Steel Profit Rises 45%

Xinhua News Agency reported today that according to the president of China Iron and Steel Association, Zhang Xiaogang, profits of iron and steel producers rose 45% to Rmb190 billion in 2007 from 2006.

China’s crude steel and pig iron production both edged up 15% last year to 489.2 million tons and 6,469.4 million tons respectively. CISA also added that net exports of crude steel rose 58% to 54.88 million tons.

The association noted that iron and steel companies reported profits surged 49.5% to a record Rmb144.7 billion on sales increased sales of 32.8% to Rmb1.99 trillion.

It is estimated that China imported 367 million tons of iron ore last year, mainly from Brazil and India.

Restructuring China Development Bank

The People’s Daily Online reported today that the China Securities Journal said a reform plan that will turn the policy bank into a commercial lender of the China Development Bank has been ratified.

The plan was reportedly approved by the State Council mid-month and will include restructuring and management reorganization after four long years of discussions.

The development bank will set up a stock company within six weeks. In addition, after restructuring the bank will expand into wholesale banking businesses and market investments.

Gainers and Losers

Telecommunication companies rose in today’s trading on the speculation that Government had met over the weekend to discuss further consolidation in the industry. China Unicom rose 0.7 % to HK$19.58. However, China Mobile declined 2.1% to HK$118, while China Netcom closed down 2.7 % to HK$25.10

Property developer Country Garden Holdings surged 11.5 % to HK$7.48 after reporting it plans to raise capital meant to fund new and existing projects.

Financial stocks gained, after the U.S. based bond insurer FGIC was downgraded, raising the specter that this may trigger further write-downs. Bank of East Asia plunged 3% to HK$40.45 and HSBC plummeted 1.9% to HK$112.6, China Construction Bank plunged 2.7 % to HK$5.74 and Bank of China slipped 2.6 % to HK$3.06.

Shipping companies also fell as well on profit taking. China Shipping Container Lines Co fell 3.5% to HK$3.58 and China COSCO shed 4 % to HK$23