Resource Stocks Rise, Higher Metals Prices

123jump.com Staff
15 Apr, 2008
New York City

Record prices in metals and crude oil lifted select stocks and brader market averages but inflation fears persisted in the market. In Hong Kong trading, Hang Seng Index rose 0.40% or 90 to 23,901.33. In Shanghai trading, CSI 300 Index rose 1.3% or 46 to 3,583.30. China expects steel demand to rise 10% to 520 million tons and domestic suppliers are expected to meet almost all the demand. Dubai based fund expects to set up a fund to invest $1 billion in China.

[R]6:00AM New York, 6:00PM Hong Kong - Resource stocks lift Hang Seng[/R]

Market sentiment

In Hong Kong trading Hang Seng Index rose 0.38% or 90.13 to 23,901.33, and the China Enterprises Index of Hong Kong-listed companies, or H shares, gained 0.01% or 1.20 to 12,665.41. In Shanghai trading, CSI 300 Index rose 1.33% or 46.97 to 3,583.30.

Daily turnover on main-board was HK$71.45 billion compared to HK$74.8 billion yesterday.

China’s demand for steel products to increase to 520 million tons

Xinhua News Agency reported today that vice president of China Metallurgical Industrial Planning and Research Institute Li Xinchuang said yesterday that China’s demand for steel products may reach 520 million tons in 2010.

Li added that domestic steel products demand in 2008 will increase by 10% and country will meet most of its various steel product needs from domestic sources. Statistics from the institute show that China''s domestic suppliers provided 95.6% of the local needs in 2007.

China’s iron and steel industry is facing shortage of coal, electricity and water, the rising price of iron ore from international suppliers, and the weak industrial research and development.

Dubai fund targets Chinese companies

China Daily reported today that buyout firm Dubai International Capital LLC says it plans to set up $1 billion fund with Hong Kong-based First Eastern Investment Group targeting Chinese companies.

Companies targeted by Dubai Capital fund will range from infrastructure and resources to healthcare.

The buyout firm plans to raise $500 million in May and is expected to reach as much as $1 billion in October, when the fund is closed.

Bilateral trade between China and the United Arab Emirates rose 41% to $20.4 billion last year.

Commented chairman of First Eastern Victor Chu: “Chinese companies are very attracted by the opportunities arising from the opening up of the Gulf region.""

Chief operating officer of Dubai International Anand Krishnan said emerging markets division plans to manage more than $5 billion of assets in Asia, the Middle East and North Africa in the next three years.

Gainers & Losers

Commodity stocks led gainers in cautious trading ahead of GDP data. Earnings were also influential in determining the general direction of the market.

Energy stocks gained after crude oil prices rose to $112 per barrel on supply constraints in the U.S., Mexico and Nigeria and increasing demand from emerging markets. CNOOC rose 3.3% and Sinopec Corp gained 1.3%.

Airlines traded lower on rising oil prices. China Southern fell 3.3% to HK$5.03, Air China declined 3.3% to HK$5.56 and China Eastern Airlines Corp plummeted 5.85% to HK$3.22.

SMIC jumped 42.3% to HK$0.69.

Domestic economy related stocks also rose as investors hedged their positions. HK & China Gas rose 1.6%, CLP increased 2.3%, and HK Electric jumped 1.12%.

China Merchants gained 0.6% after the company posted a 40% rise in 2007 profit.

Angang Steel slipped more than 8% after Credit Suisse downgraded the steel company to “underperform” from “neutral” but Zijin Mining Group gained 1.7%.