Hong Kong Stocks Retreat

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

Hong Kong stocks fell on the rising inflation worries. Hang Seng Index declined 2% to 23,119.87 nearly 25% loss from its peak in October 2007. Hong kong Exchanges & Clearing fell 35% from its peak this year after losing 3% today. HSBC Bank added 1% after reporting 21% rise in earnings a day ago.

[R]6:00AM New York, 6:00PM Hong Kong – Property and banks fell on the worries that rising costs are stoking inflation.[/R]

Hong Kong stock indexes slumped on caution before the National Party Congress in China and the earnings reporting season prevailed on the market.

Market Sentiment

In Hong Kong trading the Hang Seng Index dropped 2% to 23,119.87, and the China Enterprises Index of Hong Kong-listed mainland companies, or H shares, declined 3.5% at 12,972.21.

Daily turnover on main-board was HK$84.1 billion compared with HK$81.1 billion yesterday.

China to introduce new forex rules

The China Business News reported yesterday that China is set to introduce reviewed foreign currency regulations in the first half of this year to put a lid on illegal capital inflows and to sharpen the supervision of incoming funds.

Authorities are concerned that some of the money inflows will complicate government’s efforts to deal with overheated sectors including property market.

Separately, the Standard news reported today that the appreciation of the yuan will accelerate as Hong Kong investors speculate on the currency direction.

China''s foreign-exchange reserve in January is estimated to increase by $80 billion with as much as a third of the inflows from Hong Kong.

Gainers & Losers

Financial stocks fell on lingering worries on the state of the global financial markets and on speculation that the National Party Congress, which begins tomorrow, will usher in some administrative reforms.

China Construction Bank fell 2.6% to HK$5.67 and the Industrial & Commercial Bank of China slipped 2.3% to HK$5.2.

Hang Seng Bank dropped 3.3% to HK$142.30 on profit taking.

Ping An lost 4.7% to HK$56 on expectations ahead of its Rmb120 billion public offering. China Life slid 3.7% to HK$29.

HSBC increased 1% to HK$120.40 after the bank reported yesterday profit attributable to shareholders grew 21% to 19 billion from $15 billion a year earlier. Earnings per share increased 17.9% from a year ago to $1.65. In particular, the Hong Kong unit’s profit increased 30.3% to $7.3 billion from $5.1 billion a year ago.

Hong Kong Exchanges and Clearing Ltd fell 2.8% to HK$141.6 on the negative trading sentiment and continued volatility in the market.

PetroChina to build refinery

The People’s Daily Online reported today that PetroChina’s parent, China National Petroleum Corp. has approved a feasibility report on the project in Huludao.

The refinery project will increase Huludao''s refining capacity to 17 million tons a year from 7 million tons.

PetroChina, which is aiming to expand its refining capacity by 52% to 170 million tons annually in 2010 from 111.7 million tons at the end of 2006, is constructing and proposing refineries in Qinzhou, Guangxi Zhuang Autonomous Region, Chongqing, and in Weihai, and Shandong Province.

Asian Markets

In Tokyo Nikkei 225 Index closed higher 0.10 or 0.00% to 12,992.28, in Hong Kong Hang Seng index decreased 465.10 or 1.97% closed to 23,119.87. Australia ASX 200 index decreased 25.50 or 0.47% to close 5,380.30.

In South Korea Kospi Index increased 4.45 or 0.27% to close at 1,676.18, in Thailand SET index closed lower 11.51 or 1.37% to 831.41 and Indonesia JSE Index edged decreased 17.56 or 0.66% to 2,634.75. Sensex index in India decreased 337.99 or 2.03% to 16,339.89.