Hong Kong Down 2%, Shanghai Plunges 7%

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

Stocks in Hong Kong fell 2.3% and in Shanghai plunged 7.3%. After the close China increased the retail gasoline price by 16% and diesel oil price by 18%. Electricity price will increase 4.7% from July 1. The World Bank lifted the estimate of Chinese economic growth rate to 9.8% from 9.4% on the strength in service sector and steady world wide exports.

[R]6:00AM New York, 6:00PM Hong Kong – China passes 16% rise in gasoline costs to consumers. Trade at Shanghai ports grows 26.6%. Shanghai stocks plunge.[/R]

Market sentiment

In Hong Kong trading Hang Seng Index declined 2.26% or 528.19 at 22,797.61, and the China Enterprises Index of the Hong Kong listed mainland stocks, or H shares, fell 2.28% or 74.86 at 3,215.56. In Shanghai trading CSI 300 Index dropped 7.29% or 218.20 at 2,773.08.

Daily turnover on main-board was HK$59.04 billion from HK$71.21 billion yesterday.

China passed on at least 16% rise in retail prices to consumer, diesel prices were increased 18% and electricity price was increased by 4.7%.

China hikes cost of fuel and electricity

Retail price of gasoline will increase 16% to 6,980 yuan per ton and diesel fuel will increase 18% to 6,980 yuan per ton. Gasoline price at pumps per liter will increase 0.80 yuan and for per liter price of diesel by 0.92 yuan.

Since the past price hike in November, the international price of crude oil has increase 45% and the government has passed on only one third of price hike to consumers. Refiners had stopped increasing their output as losses keep rising on price control.

The National Rural Development Commission sets the prices of fuel did not increase prices for passenger fares for railways and local public transportation.

Electricity tariff is raised 4.7% or 2.5 cents per kilo watts from July 1st. The commission noted that more than 80% of the power generating companies reported losses in the period between January and May. In the last two years price of power coal has increased 80% and the commission has decided to hold prices at the current level till the end of the year.

World Bank forecasts China to grow 9.8%

The World Bank forecasted today in its Quarterly Update for June that China’s economic growth is expected to rise 9.8% in 2008 from a 9.4% projection made in April as real growth of exports and imports remain robust. The bank had predicted a rise of 10.8% in the year at the mid-2007. Strong service sector and steady exports on Chinese competitiveness in the various industries will sustain the economic growth.

“Speculative inflows seem to have increased recently and if policymakers consider them to be a problem, they can be discouraged by tightening controls on capital inflows and policies that effectively change exchange rate expectations,” read part of the report.

While consumer price index rise has fallen to 7.7% in May after rising to 8.7% in February, producer price index rose at a elevated but steady rate of 8.2% in May.

Shanghai port trade rises 26.6%

Xinhua News Agency reported today that Shanghai Customs statistics show that imports and exports at Shanghai port gained 26.6% year-on-year to $245.5 billion in the first five months of 2008, which is about a quarter of the country''s foreign trade.

Exports in the review period advanced 28.1% to $155.73 billion U.S. dollars and imports increased 23.9% to $89.77 billion.

The bulk of foreign trade at Shanghai port was done by overseas financed ventures, followed by state-owned companies and private Chinese businesses.

Statistics indicate that the European Union remains the port''s top trading partner, followed by the United States, Japan, Association of Southeast Asian Nations (ASEAN) and Africa.

Gainers & Losers

Aluminum Corp of China fell 5.9% after market watchers forecasted that profits will drop on rising production costs of alumina.

Financial stocks fell after hedge fund founder John Paulson said the global credit market related losses may increase to $1.3 trillion. Chine Life declined 2.8% and Ping An Insurance fell 3.4%.

Industrial & Commercial Bank of China fell 2.3% and Bank of Communications fell 3.2%.

Property stocks also fell as well. Hang Lung Properties edged down 3.5%, Sun Hung Kai Properties lost 2.6%.

Sinopec Corp and PetroChina fell 4% and 3.4% respectively as expectations that Beijing will increase the prices of petroleum products were dampened, but after the close China increased the prices of petrol at retail stations by 16%.

Retailer Li & Fung plunged 5.2% on worrying signs of a slowing economy in the U.S. However, Esprit rose 2.7%

Datang to sell T3G stake

China Daily online reported today that Datang Mobile Communications Equipment wants to sell its 32.11% stake in T3G Technology for Rmb122.2 million.

Semiconductor maker STMicroelectronics is expected to take over Datang Mobile''s stake in T3G.

World markets review

In Tokyo Nikkei 225 Index closed lower 322.65 or 2.23% to 14,130.17, in Hong Kong Hang Seng index decreased 528.19 or 2.26% closed to 22,797.61. In Australia ASX 200 index lower 76.60 or 1.41% to close 5,366.60. In Malaysia KL Composite index decreased 16.20 or 1.34% closed to 1,196.39.

In South Korea Kospi Index decreased 33.41 or 1.88% to close at 1,740.72, in Thailand SET index closed lower 23.28 or 3.04% to 742.46 and Indonesia JSE Index edged increased 8.48 or 0.36% to 2,373.06. Sensex index in India decreased 334.32 or 2.17% to 15,087.99.