Shanghai Rebounds, HK Stocks Falls

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

Regulators in China urge companies to improve their corporate governance and prevent the abuse of company capital by majority shareholders. Stocks in Shanghai and Hong Kong fell as inflation fear persist on rising energy costs. Crude oil price fell in the region. Foxconn fell 5% and Li & Fung dropped 7% on brokerage downgrades. Hong Kong companies are expected to cut production in China located factories on rising fuel and labor costs. China Development Bank takes a stake in UK based Barclays.

[R]6:00AM New York, 6:00PM Hong Kong –China Securities and Regulatory Commission urges listed firms to boost corporate governance.[/R]

Hong Kong stocks declined on concern over weakening consumption in the U.S. and brokerage downgrades, especially of exporters.

Market sentiment

In Hong Kong trading Hang Seng Index fell 0.79% or 179.49 at 22,455.67, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, slumped 0.82% or 100.27 at 12,095.98. In Shanghai trading CSI 300 Index advanced 0.38% or 11.37 at 2,980.91.

Daily turnover on main-board was HK$59.46 billion.

China to grow rapidly in next 30 years

Xinhua News Agency reported on its Website today that member of the Monetary Policy Committee of the People’s Bank of China Fan Gang said at an economic forum yesterday that China’s economy will grow markedly in the following 30 years.

Fan added that higher productivity together with market-oriented reform, urbanization and opening up to reform will be integral to economic growth. The central bank estimates that increasing productivity has contributed to 40% of China’s average annual 9% growth in the period between 1999 and 2005. However, labor cost are expected to rise over the next three decades.

Fan said, “The share of foreign investment in total investment is dropping, but the knowledge China gained from foreign-funded enterprises will be of more use in the future.""""

Regulators Urge Better Governance

China’s Securities and Regulatory Commission yesterday urged listed companies to step corporate governance as part of measures to stabilize the equities market, adding that a long-term plan to prevent majority shareholders from emblezzing funds.

According to the report, the Commission gave the companies up to November 30 to present measures to curb abuses, and insists that it will not approve any stock incentive and refinancing applications if they failed to meet the deadline.

CSRC also urged publicly listed companies to improve the information disclosure mechanism to avoid insider trading and price manipulation for the interest of the small and medium investors.

Gainers & Losers

Li & Fung fell 7% after Merrill Lynch downgraded the stock, while Yue Yuen Industrial and Esprit shed 4% and 4.1% respectively.

Foxconn International Holdings slid 5.3% after Morgan Stanley cut the rating on the stock to “equal-weight” from “overweight”.

CNOOC shed 1.9% as crude oil as crude oil fell by $2.45 to $134.55 a barrel yesterday. Hutchison Whampoa climbed 1.8% after brokerage CLSA upgraded the stock to “buy” as investors bet earnings will grow in 2008.

Hong Kong Exchanges & Clearing also rose 0.9% after Citigroup upgraded the stock to “buy” from “sell.” Hang Seng Bank increased 2.4%.

Aluminum Corp of China rebounded 2.5% after a series of sharp losses following its profit warning last week.

Asian Markets Review

In Tokyo Nikkei 225 Index closed lower 7.60 or 0.05% to 13,822.32, in Hong Kong Hang Seng index decreased 179.49 or 0.79% closed to 22,455.67. In Australia ASX 200 index higher 69.20 or 1.32% to close 5,307.00. In Malaysia KL Composite index decreased 5.22 or 0.43% closed to 1,203.89.

In South Korea Kospi Index decreased 0.13 or 0.01% to close at 1,717.66, in Thailand SET index closed lower 4.03 or 0.52% to 774.39 and Indonesia JSE Index edged increased 9.53 or 0.41% to 2,350.89. Sensex index in India increased 201.75 or 1.42% to 14,421.82.