Nervous Trading in Hong Kong

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

Hong Kong stock indexes reversed 1.8% % gain in the morning session to close marginally up as commodity and energy stocks continue to rise on the back of metals and crude oil gains. PetroChina Co Ltd jumped 1.4% to HK$11.86 and CNOOC Ltd increased 1.6% to HK$12.98. Aluminum Corp of China gained 5.4% to HK$14.94 and Jiangxi Copper edged up 6.3% to HK$18.26. Cathay Pacific Airways declined 2.2% to HK$16.18 and China Eastern Airlines fell 1.9% to HK$5.31 on rising oil prices.

[R]6:00AM New York, 6:00PM Hong Kong – Hong Kong stocks edged lower after the market reversed its earlier gains.[/R]

Hong Kong stock indexes reversed 1.8% % gain in the morning session to close marginally up as commodity and energy stocks continue to rise on the back of metals and crude oil gains.

Market sentiment

In Hong Kong trading the Hang Seng Index rose 0.1% or 32.42 to 23,623, and the China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, remained unchanged at 13,561.88.

Daily turnover on main-board was HK$75.4 billion compared to HK$89.7 billion yesterday.

World Bank: China’s growth may continue

The People’s Daily online quoted World Bank Chief Economist and Deputy President Justin Yifu Lin’s interview with Swedish newspaper Svenska Dagbladets forecasting that China’s economy will continue to grow between 8% and 10% in the next 20 years to 30 years.

Lin added that by 2030 the Chinese economy will be bigger than that of the US and China''s per capita income will be 30% to 50% of the U.S. level on the rising technical abilities of the country.

""They have the advantage of labor resources so that they can move from sector to sector. And another reason is that China itself is a great market, so it can both sell its product in China and sell it abroad."" Lin commented to the Swedish newspaper.

M&A activity adds Rmb73.9m billion

Xinhua News Agency reported today that China has set up a 25-member committee to review mergers and acquisitions and ensure transparency and quality of the examination and approval of such projects.

A consulting 15-member committee was nominated to advice on the rule and regulation framework for M&A industry.

Statistics from the China Regulatory Commission show that M&A activity added Rmb73.9 billion into listed Chinese companies and increased the market value of the companies by Rmb770 billion, while raising their average earnings per share by 75% in the last year.

Gainers & Losers

Energy stocks advanced in today’s trading after crude oil prices edged higher and stayed above $100 a barrel as investors continued to hedge their positions against weakening dollar. PetroChina Co Ltd jumped 1.4% to HK$11.86 and CNOOC Ltd increased 1.6% to HK$12.98.

Similarly, commodity stocks rallied on record gold prices after a slumping dollar drove investors to yellow metal and other precious metals. Gold prices increased to $924.60 a troy ounce in Europe and rose to $935.70 in New York.

Zijin Mining rose 2.8% to HK$10.2 as a result. Other commodity stocks increased as well. Aluminum Corp of China gained 5.4% to HK$14.94 and Jiangxi Copper edged up 6.3% to HK$18.26.

Rising crude oil prices affected property and airlines.

Property stocks rose on speculation the U.S. Federal Reserve may not aggressively cut its key rate on the rising inflation and lowered economic growth forecast from the Fed. Sun Hung Kai Properties fell 3.1% to HK$132.7 and Cheung Kong Ltd shed 1.9 % to HK$114.7.

Cathay Pacific Airways declined 2.2% to HK$16.18 and China Eastern Airlines fell 1.9% to HK$5.31 on fears rising fuel prices will increase costs.


[R]5:00AM New York, 7:00AM Tokyo – January trade deficit in Japan was 79.3 billion yen, first monthly deficit in 12 months.[/R]

Japan reported first monthly deficit in in the last twelve months as exports to the U.S. declined. Commodities and energy related stocks rose after another rise in metals and crude oil prices.

Market Sentiment

In Tokyo trading Nikkei 225 rose 2.84% or 377.91 to 13,668.28, and the broader Topix Index gained 2.5% or 32.00 to 1,334.72.

In the first section of the Tokyo Stock Exchange 9 billion shares valued at 1 trillion yen were traded and in the second section 423 million shares worth 3.6 billion yen changed hands.

Of the Nikkei 225 index shares Sumitomo Metal Mining led advancers in the Nikkei 225 index shares with a rise of 15.32% after gold prices climbed to $924.60 per troy ounce in Europe trading and $935.70 per troy ounce in New York.

UBS raised its rating on the stock to “buy” from “nuetral”.

Trade Deficit Widens

Japan’s Ministry of Finance revealed today in preliminary trade statistics published on its website that exports rose 7.7% in January from 6.9% in the previous month.

Imports for the month rose 9% widening the trade deficit to 79.3 billion yen from 3.5 billion yen from a year ago.

Mainichi news online reported today that the January deficit is the first monthly deficit in a year and worst than the 5.6 billion yen forecated by economists polled by Dow Jones and Nikkei.

Exports to Asia increased 8.2% to 3.04 trillion yen, while shipments to Europe jmped 10.6% to 993.1 billion yen. Japan''s trade surplus with the U.S. declined 4.8% to 540.7 billion yen, fifth monthly decline in a row.

Trade surplus with Asian countries, including China, spiked 76.2% to 293.6 billion yen, but the trade deficit with China eased 5.8% from a year ago to 348 billion yen.

Yen Weakens

The yen weakened from 108.00 at the close of trade yesterday to 108.20 today.

Gainers & Losers

Sumitomo Metal Mining led gainers in the Nikkei 225 index shares with a rise of 15.32% followed by rises in Toho Zinc Co. Ltd of 14.96%, in Mitsumi Electric Co of 9.25%, in Okuma Corp of 8.40%, in Matsushita Electric Industries of 8.08%.

Sumitomo Metal Mining advanced after gold prices increased to $924.60 a troy ounce and rose to $935.70 in New York.

Brokerage UBS also raised its rating on the stock to “buy” from “nuetral”.

Metal prices rose on U.S. reports that consumer inflation unexpectedly gained to 0.4%. In addition, core inflation, excluding volatile food and energy, rose to 0.3% in January.

Other commodity stocks gained as well. Sumitomo Metal Industries edged up 3.29%, Nippon Mining House jumped 5.70% and Nippon Steel jumped 3.37%.

Exporters advanced as the yen weakened against the U.S. dollar. Canon Inc. gained 3.31%, Casio Computer rose 4.83% and Komatsu advanced 3.95%.

Energy stocks rallied as the Nymex March West Texas Intermediate hit a record $101.32 a barrel before retreating but closing just above $100 a barrel. Inpex Holdings and Nippon Oil Corp rose 2.70% and 3.99% correspondingly.

Bridgestone Corp. led decliners in the Nikkei 225 index shares with a drop of 1.14% followed by losses in Nissan Motor Corp of 0.72%, in Nippon Telegraph of 0.62%, in Asahi Glass Co of 0.42%, in Nikon Corp. of 0.17%.

Company News

The Mainichi news online reported today that General Electric said in a regulatory filing with the U.S. Securities and Exchanges Commission it expects to complete the sale of its Japanese consumer financing unit at the end of the third quarter.

GE recorded a $908 million loss in connection with the sale of GE Consumer Finance unit.

The company concluded the sale of its U.S. mortgage business in December last year for $117 million on the mounting losses in the subprime mortgage lending.

Shinsei Bank to merge with Ikeda

Bloomberg news reported today that Shinsei Bank Limited had preliminary talks with Bank of Ikeda Limited to merge businesses and create a bank with 4 trillion yen of deposits.

The baking unit of Mitsubishi UFJ owns 68% of Shinsei Bank.