Shanghai Fell 3%, Hong Kong Up 1.6%

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

China increased its reserve ratio requirements for banks to 16% and may increase again if economy does not slow down. Economists are expecting central bank to authorize additional tightening measures after a surge in inflation and rapid rise in property prices and food and energy costs. In Hong Kong trading, Hang Seng rose 1.6% to 24,258 but in Shanghai CSI 300 index fell 3% to 3,386. China reported a total international investment of $92 billion at the end of 2007.

[R]6:00AM New York, 6:00PM - China’s central bank increases reserve ratios for banks to 16%, however analysts expect more tightening ahead.[/R]

In Hong Kong trading Hang Seng Index rose 1.59% or 380.61 to 24,258.96, and the China Enterprises Index of Hong Kong listed mainland companies, or H shares, climbed 2.33% or 293.88 to 12,887.76.

In Shanghai trading CSI 300 Index however plummeted 3.07% or 107.39 to 3,386.63.

Daily turnover on main-board was HK$72.66 billion compared to HK$64.63 billion yesterday.

China increases bank reserve ratios to 16%

The Peoples Bank of China announced yesterday that the amount lenders must hold in reserve has been increased for the third time this year by half a percentage point to 16% with effect from April 25.

The intervention comes after the National Bureau of Statistics announced that March CPI increased to 8.3%. Incremental tightening measures may not prevent rapid rise in inflation and inflation from overheating.

Goldman Sachs in a research report noted, ""We expect the central bank to implement further tightening measures including regular hikes to the reserve requirement, two hikes to benchmark interest rates and continued credit rationing in commercial lending.""

China’s combined investments jump to $92 billion in 2007

China Council for the Promotion of International Trade vice chairman Zhang Wei reported yesterday that the country’s cumulative direct investments abroad amounted to $92.05 billion at the end of 2007.

Investments have mainly been driven by the country’s ""going global"" strategy for domestic companies launched in 1998.

In addition, CCPIT and the China Chamber of International Commerce formulated programs in 2006 to facilitate domestic companies'' global strategy to help them make better use of the domestic and international markets.

By the end of 2006, more than 5,000 Chinese investment entities had established almost 10,000 companies overseas in 172 countries and regions, with a combined international investment of $90.63 billion.

China’s tax revenue rise 33.8% in first quarter

China’s State Administration of Tax said yesterday China''s first quarter tax revenue rose 33.8% from a year ago to Rmb1.51 trillion in the first quarter of the year, the State Administration of Taxation said on Wednesday.

Domestic value-added tax, along with consumption and business tax gained 25.2% to Rmb754.1 billion, accounting for 39.7% of the total.

Statistics also reveal that corporate and individual income tax surged 34.5% to Rmb381.4 billion, which is 25.6% of the total. Stamp tax on security transactions soared 387.8% from a year earlier to Rmb59.7 billion.

China''s tax revenue has grown steadily as the quarterly collections have increased by more than 25%.

Gainers & Losers

Commodity stocks gained after the price of oil rose to $114 a barrel as U.S. stockpiles dropped and fueled speculation that the government will intervene and help cushion oil companies from further losses. Sinopec gained 5.8% and PetroChina jumped 3.4%.

Property companies stocks increased. China Overseas gained 3.6% and Hang Lung Property increased 2.6%. However utilities Shanghai Electric fell 6.6% and Datang Power declined 1.8%.

Huaneng Power International shed 0.6% after the company’s first quarter profit fell by more than 50%. Citigroup also downgraded its rating on the stock from “buy” to “sell”.