PPI in China Surges; Stocks Decline

123jump.com Staff
09 May, 2008
New York City

Hong Kong stocks fell on mounting concern over the health of the global economy after Vice Premier Wang Qishan said inflation has evolved as the country

[R]6:00AM New York, 6:00PM Hong Kong - China producer price index rises 8.1% in April as inflation in raw materials, fuel and metals prices continues to rise.[/R]

Hong Kong stocks fell on mounting concern over the health of the global economy after Vice Premier Wang Qishan said inflation has evolved as the country’s biggest economic problem, adding that Beijing will further tighten its monetary policy.

In Hong Kong trading the Hang Seng Index fell 1.52%, or 386.62, at 25,063.17, down 4.5% for the week, and the China Enterprises Index of Hong Kong-listed mainland companies, or H shares, dropped 1.61% or 224.01 at 13,662.58.

In Shanghai trading, CSI 300 Index fell 1.17% or 46.12 to 3,878.92.

Daily turnover on main-board turnover was HK$77.27 billion compared to HK$76.95 billion yesterday.

China producer price index increases 8.1% in April

The National Bureau of Statistics reported today that China’s producer price index for industrial products increased 8.1% in April from the same month a year ago, while the factory-gate prices of raw materials, fuel and power increased 11.8%.

China’s CPI in March rose at 8.3% after surging 8.7% in February. NBS noted that the PPI was at 2.4% as recently as August 2007.



Spokesperson of the statistics bureau Li Xiaochao said higher ex-factory prices could lead to a rising CPI, as producers might seek to pass on their own rising costs to consumers. China has set an annual CPI target of 4.8% this year, substantially lower than the current level of price inflation.

Also factory prices of crude oil increased 37.9% in April over the same period last year, while gasoline rose 10.8%, diesel advanced 10.2% and kerosene gained 11.7%. In addition, the producer prices of raw coal climbed 20.9%, while those of steel products increased between 24.9% and 41.1%.

The statistics also showed that the purchasing prices, or costs, of fuel and power gained 21.2%, ferrous metals jumped 20.8%, non-ferrous metals gained 6.1% and chemical raw materials rose 4.2%. The PPI for manufactured goods climbed 7.2% in the first four months of this year, while the costs of raw materials, fuel and power rose 10.3%.

In the month under review, the price index of food advanced 11.9%, which surpassed that for garments by 2.3% and daily commodities rose 3.7%. However, the prices of consumer durables declined 0.5%.

China residential land prices increase 22%

China Daily reported that according to the China Urban Land Price Monitoring System Beijing residential land prices increased 22% from a year ago to Rmb 1,279 per square meter in the first quarter of the year. According to the report, about 42 plots of land from10 during the same period last year were put on the market in the first quarter.

Land transactions were most active, with one piece of land being sold for a record Rmb 1.74 billion.

Gainers & Losers

HSBC declined 1.5% after Morgan Stanley downgraded its stock to “underweight” from “equal-weight”.

Sinopec fell 3.3% to HK$7.61 and PetroChina slipped 2% after crude prices jumped to a record $124 a barrel.

Manulife Financials fell 4.6% after its net income dropped to C$869 million in the first quarter from C$986 million in the year-ago period, due to sharp declines in the U.S. and Asia equity markets.

China Mobile edged down 1.6%. However, China Unicom gained 0.25% at HK$16.92, China Telecom rose 1.26% and China Netcom increased 1.4%.