Realty, Financials Rise on Fed Move

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

In Hong Kong trading Hang Seng Index rose 2% or 427.41 to 23,422.76, and the China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, advanced 2.3%, or 288.61 to 12,877.35. The U.S. Fed led liquidity move to encourage trading in mortgage markets lifted stocks in the U.S, Canada, Europe, Japan, Australia, and Hong Kong. However, the HK government indicated that rate reduction in tandem with the U.S. action at the end of this month is not likely.

[R]6:00AM New York, 6:00PM Hong Kong - U.S. interventions boost Hong Kong’s financial and realty stocks.[/R]

In Hong Kong trading Hang Seng Index rose 2% or 427.41 to 23,422.76, and the China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, advanced 2.3%, or 288.61 to 12,877.35.

Daily turnover on main board wasHK$89.9 billion compared to HK$89.0 billion yesterday.

Central Banks to inject liquidity in troubled markets

The U.S. Federal Reserve led a liquidity injection plan along with the Bank of Canada, the Bank of England, the European Central Bank and the Swiss National Bank the Bank into money markets in North America and Europe to ease the rise in money market interest rates. Mortgage rates have been rising in the recent months and credit markets for subprime are nearly frozen for months.

U.S. Federal Reserve authorities also offered to double the sums it is prepared to lend, raising the total facilities available by a further $200 billion from the intervention announced last week.

The Federal Reserve added that it will increase the currency swap arrangements with ECB by $10 billion and with the Swiss National Bank by $2 billion. Australia injected $721 million in the credit markets.

China imports and exports rise 23%

The People’s Daily online reported today that China''s total international trade in January and February increased by 23% year-on-year to $365.9 billion.

Exports gained 16.8% to $196.99 billion, which is 24.7% lower than the same period last year. Imports however grew 30% to $168.94 billion, an advance of 10.3% from the comparative period last year.

In February, the trade surplus declined by $15.2 billion from the same period last year to $8.56 billion.

The online addition added that total imports and exports of foreign-funded enterprises in the first two months of this year rose by 18.8% at $204.52 billion, while the aggregate imports and exports of state-run enterprises gained 28.7% to $89.05 billion.

The EU, U.S. and Japan were China’s biggest trading partners with bilateral trade increasing 19.9% to $61.16 billion, 9% to $47.7 billion and 15.1% to 38.4 billion respectively.

China central bank saps Rmb175 billion from market

Xinhua News Agency reported today that the People’s Bank of China (PBOC) yesterday that it drained Rmb175 billion from the inter-bank market through central bank bill issues and repurchase transactions.

The PBOC is reportedly using more open market operations to sap excess liquidity as interest rate cuts in the United States have made it increasingly difficult to raise rates.

Hong Kong Government to fund HK$37.4 billion rail link

The Standard news reported today that the government will fund the HK$37.4 billion construction of a new rail link between Sha Tin and Central that will carry one million passengers per day, adding that the 17-kilometer link will be leased to the MTRC for HK$91.8 billion over a period of 50 years.

Work on the first stage from Tai Wai to Hung Hom, which was endorsed by the Executive Council yesterday, will begin in 2010 and be completed in 2015.

An estimated 11,000 jobs will be created during the construction of the project, while 9,600 workers will be needed to operate the link.

Gainers & Losers

Financial stocks gained after the U.S. and other G-10 central banks committed to inject liquidity into the money markets in order to ease the credit crunch on the money markets.

HSBC Holdings rose 1.9% to HK$125.20, China Life advanced 3.5% to HK$29.50, Ping An Insurance climbed 4.1% to HK$60.65 and the Industrial & Commercial Bank of China increased 2.3% to HK$5.26 as a result.

Realty stocks gained notwithstanding indications from the government that it will not be cutting interest rates in tandem with the U.S. next week as deposits rates are already low.

R&F Properties edged up 4.9% to HK$20.50, Country Garden gained 4.2% to HK$7, Hang Lung Properties increased 6.5% to HK$27.10 and Sun Hung Kai Properties edged up 4% to HK$124.6.