Nervous HK Market, Banks Decline

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

Hong Kong stocks closed lower after the worries related to U.S. economic slowdown resurfaced. The U.S. economy grew at mere 0.6% in the fourth quarter after rising at 4.9% in third quarter left investors worried. Hang Seng fell 1.1% today but rose 3.7% for the week in a nervous trading. HSBC fell 2.1% as banks and property stocks fell. HSBC is likely to sell its French bank network to a regional bank in France for 2.1 billion euros.

[R]6:00AM New York, 6:00PM Hong Kong - Hang Seng declined 1.1% in Friday’s trading but closed up 3.7% for February.[/R]

Stocks in Hong Kong slumped in today’s trading on heightened fears that the U.S. will fall into a recession after GDP grew by a lower-than-expected 0.6% in fourth quarter.

In Hong Kong trading the Hang Seng Index declined 1.1% at 24,331.67, up 3.7% for the month, and the China Enterprises Index of Hong Kong-listed mainland companies, or H shares, slipped 0.8 % at 13,931.88, rising 11.6% for the month.

Daily turnover on main-board turnover was HK$80.1 billion compared to HK$82.4 billion yesterday.

U.S. GDP falls

The U.S. Commerce Department reported yesterday that gross domestic product slowed to 0.6% in the fourth compared to a 4.9% rise in the third quarter of 2007.

Separately, the U.S. Federal Reserve Chairman Ben Bernanke said yesterday that some banks faced the threat of failing as a result of the widening credit market losses.

China Social Security Fund Rise to $70 billion

People’s Daily Online reported today that China''s social security fund’s Council Chairman Dai Xianglong said at the 2008 Pension Fund International Seminar held yesterday the fund’s assets rose sevenfold in the last six years to exceed US$70 billion by the end of 2007.

The assets mainly came from cash injections from government and capital and equity assets acquired from selling state-owned stakes.

Speaking at the same seminar, Yao Gang, vice-chairman of the China Securities Regulatory Commission (CSRC), told the seminar that the CSRC will continue to raise the proportion of the social security and insurance funds that can be invested in the equity markets.

China Banking Regulatory Commission warns lenders

Xinhua News Agency reported today that vice–chairman of the China Banking Regulatory Commission Jiang Dingzhi warned lenders that despite the decline in their non-performing loan ratio, banks should not be complacent.

Dingzhi added that lenders must be wary of the risks of lending to real estate developers and highly polluting or energy-intensive firms, ordering them to step up controls to prevent a rebound in bad loans.

Shanghai banking regulator showed that 2 billion in property loans went sour in 2007, twice as much as in 2006. More than one quarter of the new loans extended by domestic banks in Shanghai last year went to real estate, and by the end of 2007 the sector accounted for about 32 percent of their outstanding loans, the 21st Century Herald reported.

He also urged banks to watch manufacturers with obsolete plants and firms whose loans are guaranteed by local governments.

Gainers & Losers

Property stocks fell after the U.S. Federal Reserve Chairman Ben Bernanke noted that rising inflation was making it increasingly difficult to fight the economic slowdown presently plaguing the economy.

Hang Lung Properties fell 4.6% to HK$28.75 and Sun Hung Kai Properties shed 2.1% to HK$139. Sino Land fell 4.6% to HK$19.98 and Henderson Land Development fell 3% HK$61.90, rounding out a loss of 10% for the week.

Sun Hung Kai also fell after Goldman Sachs downgraded the stock to “neutral” from “buy”.

HSBC dropped 2% to HK$120.7. HSBC is likely to sell its French network of branches for 2.1 billion to Banque Federales des Banques Populaires.

Commodity stocks also rose as the dollar continued to slide. Gold for immediate delivery gained 0.3% to $973.38 an ounce. Lingbao Gold rose 7.2% to HK$5.33 and Zijin Mining advanced 1% to HK$10.66.

In addition, nickel miner Xinjiang Xinxin Mining Industry Co Ltd increased 10.4% to HK$7.11.

PC maker Lenovo Group Ltd fell 3.2% to HK$5.40 on news that IBM sold $80 million worth of the company’s shares at a 3% premium to yesterday closing prices.

Company News

The Standard News reported today that Xingfa Aluminium is planning to raise HK$600 million by issuing at least 100 million shares. The company is planning to list in Hong Kong on March 31.

The online edition also reported that China Railway Construction Corp opens its retail offering today. One lot of 500 shares will cost about HK$5,403.

It is believed that the international tranche of the H-share listing is already at least 10 times oversubscribed and the railway builder has secured nine cornerstone investors including Cheung Kong and pension fund controlled by Singapore.

CRCC will list in Hong Kong on March 13.

Asian Markets Indexes

In Tokyo Nikkei 225 Index closed lower 322.49 or 2.32% to 13,603.02, in Hong Kong Hang Seng index decreased 260.02 or 1.06% closed to 24,331.67. Australia ASX 200 index decreased 79.10 or 1.40% to close 5,572.10.

In South Korea Kospi Index decreased 24.55 or 1.41% to close at 1,711.62, in Thailand SET index closed higher 3.64 or 0.43% to 845.76 and Indonesia JSE Index edged decreased 34.37 or 1.25% to 2,721.94. Sensex index in India decreased 245.76 or 1.38% to 17,578.72.