Stocks in China Region Fall

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

GDP in the first quarter in China dipped to 10.6% from 11.7% a year ago, industrial production rose 16.4% and inflation to 8%. Food prices in the quarter surged 21% on tough weather conditions and rising fuel prices in the international markets. Retail prices in the quarter rose 7.4% and producer prices increased 6.9%. The news sent stocks lower in China and Hong Kong on the worries that the government will take measures to tighten the economy further.

[R]6:00AM New York, 6:00PM Hong Kong - China’s first quarter GDP eases to 10.6% and CPI slows to 8.3% in March.[/R]

Hong Kong stock averages fell after reports on robust first quarter economic growth stoked fears that the government will further intervene with tightening measures meant to prevent the economy from overheating.

Market sentiment

In Hong Kong trading Hang Seng Index declined 0.10% or 22.98 to 22,878.35, and the China Enterprises Index of Hong Kong-listed companies, or H shares, dropped 0.56% or 71.53 to 12,593.88.

In Shanghai trading, CSI 300 Index fell 2.49% or 89.25 to 3,494.02.

Daily turnover on main-board was HK$64.63 billion compared with HK$71.45 billion yesterday.

China’s GDP eases to 10.6% in first quarter

The National Bureau of Statistics reported that China’s economic growth eased from 11.7% realized in the first quarter of 2007 to 10.6% in the first three months of 2008.

GDP growth continued despite the inclement weather conditions at the beginning of the year and ongoing turmoil in the global credit markets.

The NBS also reported that industrial production rose 16.4% from a year ago in the first quarter, 1.9% lower than in the first quarter 2007.

Fixed asset investment grew 24.6% on the year to Rmb2.18 trillion.

Separately, the statistics bureau reported that China''s consumer price index increase slowed to 8.3% in March from 8.7% in February.

Li Xiaochao, the NBS spokesperson added that CPI for the first quarter of the year reached 8% and in the quarter inflation increased 7.8% for urban areas and 8.7% for rural areas.

According to the statistics office, food prices spiked 21%, driving CPI up by 6.8%. Also housing prices and rents rose 6.6% on average, nudging the index by one percentage point.

On the overall, first quarter retail prices grew 7.4%, 5.3% points higher from a year ago, while the producer price index, or PPI, rose 6.9% or 4% higher from a year ago.

Prices of raw materials, fuels and power supply also advanced 9.8% in the first three months of this year, 5.7% higher than the level for the same period a year ago.

Gainers & Losers

Stocks in Hong Kong fell on fears the government may issue tighter fiscal measures.

Shares of PICC Property and Casualty fell 11.4% to HK$6.77 after China''s largest property insurer posted disappointing earnings for 2007.

Oil and gas producer CNOOC rose 3% as crude oil prices climbed above $114 per barrel yesterday on supply disruptions in Mexico.

However the rising energy prices adversely impacted on airlines. China Eastern Airlines Corp declined 3.4%, Cathay Pacific fell 1.7%, China Southern plummeted 2.2% and Air China dropped 4.7%

Coal miner Shenhua Energy rose 0.2% after it produced and sold more fuel in the first quarter to satisfy rising demand.

Tsingtao Brewery Co Ltd plunged 8% after it reported that a hike of income tax from 15% to 33% for 2007 will undermine the company’s earnings. Earnings in the first quarter may be lowered to Rmb 135 million from Rmb 560 million.

SMIC tumbled after surging 19% in previous day trading after the company denied that it is close to a major tie-up. In addition, HSBC also downgraded the stock from “neutral” to “underweight”, citing that any suitor will not be able to mend the company’s chip making business.