Earnings and Rate Cut Lift HK Stocks

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

Stocks in Hong Kong rallied tracking gains in the U.S. Realty and financial stocks led the gainers. Hang Seng added 2.3% to 21,866.94, China Enterprise Index gained 3.3% to 11,438.75, and CSI 300 index increased 3.3% to 3,888.86. China Mobile jumped 3% after it reported full year profit rise of 37% and it added 7 million new subscribers in January. Petro China reported 21% rise in 2007 revenue and earnings gain of 2.4%.

[R]6:00AM New York, 6:00PM Hong Kong – PetroChina reported lower than expected earnings on higher exploration costs. China Mobile earnings rose 37% in 2007 to Rmb 87.1 billion.[/R]

Hong Kong stock averages gained driven by realty and financial stocks after the U.S. Federal Reserve cut its key short-term target rate and on strong earnings reports from China Merchants Bank and China Mobile.

In Hong Kong trading, Hang Seng Index advanced 2.26% or 482.33 to 21,866.94, and China Enterprises index of H shares, or Hong Kong-listed shares in mainland companies, gained 3.3% or 363.92 at 11,438.75. Also, CSI 300 Index tracking stocks in Shanghai increased 3.32% or 124.91 to 3,888.86.

Daily turnover on main-board was HK$98.7 billion compared to HK$114.2 billion yesterday.

Ping An buys 50% stake in Fortis asset management

Fortis after writing down 1.8 billion euros was forced to sell stake in its asset management. Ping An, flush with cash, agreed to purchase 50% stake in the asset management unit of the Belgian Dutch company for 2.15 billion euros. Ping An is planning to raise $14 billion in stock offering in China. Fortis Investments manages 133 billion and after integrating with the recently purchased ABN Amro assets under management will rise to 245 billion euros.

Earnings Update

Petro China reported annual net profit of RMB145.63 billion for the period ended December 31, 2007, representing an increase of 2.4% from the previous year. Revenues in the year 2007 rose 21.2% to Rmb 835.04 billion and earnings per share were Rmb 0.81. The board proposed to pay final dividend of Rmb 0.156859 per share, based on 45% of the net profit of the group for the year ended December 31, 2007, after deducting the interim dividend for 2007. Together with the interim dividend of Rmb 0.205690 per share, the full year dividend of 2007 will be Rmb 0.362549.

In 2007 total oil and gas output hit an aggregate of 1.11 billion barrels of oil equivalent, representing an increase of 4.8 percent from 2006.Crude oil output reached 839 million barrels, representing an increase of 8.1 million barrels or 1.0 percent from the previous year. Output of marketable natural gas reached 1.63 trillion cubic feet, representing a growth of 255.1 billion cubic feet or 18.6 percent from the previous year.

During the period, volume of processed crude oil reached 824 million barrels, representing an increase of 38.6 million barrels or 4.9% year on year. The Company produced 22.02 million tons of gasoline; 2.02 million tons of kerosene, and 47.35 million tons of diesel.

Annual sales of refined products reached 85.74 million tons, of which retail sales accounted for 54.82 million tons, up 16.6% year-on-year. The sales network of refined products was further strengthened. The total number of service stations reached 18,648 units, representing an increase of 2.4% year-on-year. Average daily sales volume of individual service station reached 8.4 tons, increased 7.7% year-on-year.

As of the end of 2007, overseas oil and gas net production reached 57.16 million barrels of oil equivalent, representing an increase of 0.9% year-on-year. Overseas oil and gas exploration achieved new progress in Chad, Kazakhstan as well as other regions.

PetroChina listed the A shares on the Shanghai Stock Exchange on 5 November 2007. The Company issued 4 billion A-shares with an offer price of Rmb16.7 per share. The net proceeds were Rmb 66.8 billion. Currently, the public float of the Company stands at 13.71%.

PetroChina stock in Shanghai has plunged 49% since its peak in November of 2007 from Rmb 48.62 to Rmb 22.60 and has dropped 29% in Hong Kong trading to HK$9.80 according to data provided by the Shanghai and Hong Kong Stock Exchanges.

House prices increase 11%

China Daily reported today the National Development and Reform Commission which tracks housing prices in 70 large and medium-sized cities, said house prices in major cities increased 10.9% from a year in February.

Second-tier cities such as Urumqi in Xinjiang, Ningbo in Zhejiang and Haikou in Hainan led the price rise, increasing 24.2%, 18.3% and 18.9% respectively.

In addition, house prices rose 16.5% in Beijing and 9.8% in Shanghai in February from a year ago, despite expectations they might fall after the government tightened loans for developers.

Notwithstanding heightening fears of a slowdown in the property sector, home prices rose 0.2% on January.

New apartment prices last month rose 11.8% year-on-year. However, the growth rate fell 0.4% from a year ago.

The government has set aside Rmb6.8 billion in its 2008 budget for low-rent housing for the urban poor in the western and central parts of the country, an increase of 33% from last year and 70% of land supply for homes for middle- and low-income families.

Yuan in record rise

China’s currency rose markedly after the U.S. Federal Reserve cut its key rate by three-quarters of a percentage point to 2.25% in order to revitalize the ailing economy.

According to China Foreign Exchange Trading System, the central parity rate of the yuan increased by 222 basis points to 7.0648 yuan against the U.S. dollar. China has to balance arising inflation from a rising money supply and keep prices of its goods in check to keep the export demand from falling.

Gainers & Losers

Realty and financial stocks rose after the U.S. Fed rate cut. Hong Kong lending rates always move in tandem with adjustments in the U.S. China Overseas rose 13.5% to HK$12.14 and Guangzhou R&F Properties gained 11% to HK$17.76. Hong Kong Monetary Authority cut its lending rate by 0.75% to keep parity with the U.S. dollar rates.

Sino Land jumped 6% to HK$17.36 and New World Development edged up 9.8% to HK$17.7. HSBC Holdings Plc increased 3.8% to HK$121.80, while China Merchants rose as much as 11% after its profit exceeded market expectations.

China Mobile advanced 3% to HK$107.6 after the mobile phone company quarterly profit rose 37%. Alibaba.com rose 13.6% to HK$13.86.

Microsoft signs agreement with Wuxi

The People’s Daily Online reported today that Microsoft Corp. and city of Wuxi, in the eastern city of Jiangsu, have signed a strategic cooperation agreement on the settlement of the Wuxi Service Outsourcing Professional Training Base & Jiangsu (Wuxi) Microsoft Technology Center.