Weak Stocks in HK, Shanghai

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

Stocks in Hong Kong and Shanghai fell as inflation worries hobbled investors. Shanghai based CSI 300 index fell 2.2% and Han Seng Index in Hong Kong dropped 1.1%. Baosteel, representing Chinese steel companies agree to iron ore price increase between 80% and 96% for shipments from Rio Tinto in Australia. The sharp rise in commodity price reflects a strong demand for the iron ore and steel in China. Rio Tinto hope to ship between 320 and 420 million tons of ore.

[R]6:00AM New York, 6:00PM Hong Kong - Baosteel agrees on a 96.5% increase in iron ore prices. Stocks in Shanghai and Hong Kong fell.[/R]

Market sentiment

In Hong Kong trading Hang Seng fell 1.14% or 258.94 at 22,456.02, and the China Enterprise Index of Hong Kong listed mainland shares, or H shares, slid 1.78% or 217.80 at 12,018.51. In Shanghai trading CSI 300 Index rose 2.22% or 61.97 at 2,851.92.

Daily turnover on main-board was HK$59.17 billion compared with HK$59.68 billion yesterday.

Baosteel agrees on 96.5% increase in iron ore prices

Xinhua News Agency reported today that Baosteel yesterday said it has agreed with Rio Tinto on a price hike of 96.5% for iron ore for shipments in 2008.

Baosteel negotiated on behalf of China’s steel industry and agreed on a 79.88% rise for Pilbara blend fines and Yandicoogina fines and a 96.5% increase for Pilbara Blend Lump for the contract year starting on April 1, 2008.

Under the agreement, prices will be $144.66 for per dry metric ton unit of Pilbara blend fines and Yandicoogina fines and $201.69 for per dry metric ton unit of Pilbara blend lump.

""Chinese steel firms will support Rio Tinto to increase investment and output to meet market demand,"" said Baosteel in a statement.

Separately, Rio Tinto said in a statement that the new prices will be the benchmark for all Hamersley long-term contract sales for 2008-09 and includes its Pilbara Blend product that was launched in July 2007.

Sam Walsh, chief executive of Rio Tinto''s Iron Ore Group, said: “The agreement builds on the valuation premium for Rio Tinto''s Pilbara iron ore businesses, the importance of which is highlighted as we move towards our 320 and 420 million ton per annum goals from our expected capacity of about 200 million ton in 2008.""

Foreign banks in China to rise to 100 by 2011

Xinhua News Agency reported today that a Pricewaterhouse Coopers survey released yesterday showed that the number of foreign banks in China may rise to 100 by 2011 from the current 76 banks. Also, locally incorporated banks will rise from the present 21 foreign banks to 60 by 2011.

The report noted that a poll of 42 banks showed that 9 expect revenue to rise at least 100%, while 16 forecast a growth between 40% and 100%.

Lenders also project that business expansion will double employee numbers to 54,630 by 2011 from the current 27,473.

Gainers & Losers

Stocks in Hong Kong fell as the market awaited the interest rate decision by the Federal Reserve tomorrow.

Foxconn declined 5.4% to HK$8.88 on slowing sales and demand in North America.

Hong Kong Exchanges & Clearing fell 4.3% to HK$117.70.

CNOOC advanced 1.4% as international crude oil prices rose above $137 a barrel on speculation that increased output from Saudi Arabia will not be sufficient to offset supply disruptions in Nigeria.

The company’s affiliate China Oilfield Services rose 1.2% on expectations that its acquisition of Norwegian oil driller Awilco Offshore is on track.

Yue Yuen Industrial Holdings jumped 2.6% after Morgan Stanley upgraded the stock to “overweight” from “equal-weight”.

Huaneng Power plunged 7.8% on expectations that the recent energy price hikes were insufficient to relieve pressures on profit margins.

Asian Markets Review

In Tokyo Nikkei 225 Index closed lower 7.91 or 0.06% to 13,849.56, in Hong Kong Hang Seng index decreased 258.94 or 1.14% closed to 22,456.02. In Australia ASX 200 index higher 6.30 or 0.12% to close 5,290.00. In Malaysia KL Composite index increased 4.87 or 0.41% closed to 1,200.28.

In South Korea Kospi Index decreased 4.75 or 0.28% to close at 1,710.84, in Thailand SET index closed lower 5.15 or 0.67% to 763.75 and Indonesia JSE Index edged increased 2.63 or 0.11% to 2,365.38. Sensex index in India decreased 186.74 or 1.31% to 14,106.58.