Coal, Metals Rise in China

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

Chinese coal and other mining companies rose as crude oil price rise lifted spot prices of coal and metals. The earthquake damage and three month old snow storms have put the food and energy supply at a risk in the mainland China. Vegetables, fruits and other food priced have surged and now metal and crude oil prices are rising rapidly. CSI 300 index in Shanghai trading fell 0.6% but Hang Seng index rose 0.5%.

[R]6:00AM New York, 6:00PM Hong Kong – Chinese coal and mining companies rose as prices of commodities in the region rise. Hang Seng and CSI 300 indexes diverged as fears of inflation held investors back.[/R]

Market sentiment

In Hong Kong trading Hang Seng Index rose 0.48% or 123.37 at 25,742.23, and the China Enterprises Index of Hong Kong-listed mainland companies, or H shares, gained 1.28% or 181.72 at 14,367.70. In Shanghai trading CSI 300 Index declined 0.56% or 22.05 at 3,914.07.

Daily turnover on main-board was HK$70.49 billion from HK$79.6 billion on Friday last week.

China’s accommodation and catering retail sales increase 25.2%

China’s Ministry of Commerce reported on Friday last week that China’s accommodation and catering retail sales rose 25.2% from the same period a year ago to Rmb112.2 billion in April as a result of food price increases and a low base of comparison. The increase accounts 13.8% of the total consumer goods retail sales.

According to the report in the first four months, accommodation and catering retail sales jumped 23.9% to Rmb 408.9 billion from the comparative period last year, which accounted for 14.3% of the total consumer goods retail sales.

Also in the four-month period, foreign investors have set up 229 new accommodation and catering enterprises, down 7.7%, and utilized $350 million, up 30%, and annual retail sales of catering enterprises with more than 40 workers rose 21.8% to Rmb134.7 billion.

China’s listed companies’ profits to rise 20% despite quake

Xinhua News Agency reported today that China head of JP Morgan Chase Li Jing said at a press conference on Friday that profit for China''s listed companies may increase 20% this year despite the strong quake in southwest China.

Profits at domestic banks are expected to rise 40% in the second half of this year on wider net interest margin, development of infrastructure and better assets quality.

As reported by Xinhua Li said, ""The quake would have limited effect on the national GDP growth and further tightening on the economy is unlikely in the second half of this year. Sichuan is a major province that provides farm produces like pork, a staple meat for Chinese people, and the consumer prices in the southwest region might rise substantially.""

Last year, Sichuan’s GDP rose to Rmb1.05 trillion, accounting for 4% of the revised national figure of Rmb 24.953 trillion.

JP Morgan estimates that the national economic climate in second quarter will be better than the first quarter, with companies in financial, manufacturing, consumption and energy industries witnessing higher profits.

Gainers & Losers

Commodity stocks gained on rising oil and coal prices.

China Shenhua gained 6.9% to HK$36.35 after coal prices jumped to a 12-year high as the globalCOAL NEWC Index reported that the weekly index for power-station at the New South Wales port jumped 0.9% to $134.85 a metric ton in the week ended May 16.

China Coal and Yanzhou Coal also rose more than 5% after Goldman Sachs upgraded the companies stocks to “buy” from “neutral”.

CNOOC advanced 3.4 % as crude oil prices gained to a record $127.82 on May 16.

Property stocks rose on expectations a massive reconstruction program in the aftermath of the earthquake in Sichuan will generate more business. Cheung Kong increased 1.64% and Hang Lung Properties gained 1.28%.

However, Sun Hung Kai Properties dropped 1% after its chairman filed a suit last week to prevent his removal from the company.

Hongkong Chinese slid 8.8% to HK$1.35 after announcing plans to raise HK$471 million through a rights issue to fund real estate projects.

Cement producer Anhui Conch increased 4.7% to HK$73.4 on news that the company will expedite capacity expansion after the devastating earthquake in the southwest province.

HSBC gained 0.22% to HK$135.7 on reports on Saturday that it will buy a 73.21% stake of Indian brokerage IL&FS worth $261 million.