HK Declines 21%, Shanghai Down 48%

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

Stocks in Hong Kong fell 21% in the first half as credit market jitters dragged stocks lower. Rising energy and food prices dragged stocks in Shanghai lower in the first half as well. Stocks in Shanghai are down nearly 50% from the peak in October. Tanshan Steel and Handan Steel merge to form Hebei Steel, the largest Chinese steel company with production of 50 million tons in 2009. Shanghai CSI 300 index dropped 23% in June and lost 48% for the year.

[R]6:00AM New York, 6:00PM Hong Kong - Hang Seng declines 20.5% in the first half.[/R]

Market sentiment

In Hong Kong trading Hang Seng Index edged up 0.27% or 59.66 at 22,102.01, declining 20.3% in the first half of the year, and China Enterprises of Hong Kong listed mainland shares, or H shares, rose 0.81% or 95.33 at 11,909.75. In Shanghai trading, CSI 300 Index slumped 0.86% or 24.20 at 2,791.82.

Daily turnover on main-board was HK$53.06 billion compared with HK$65.03 billion on Friday last week.

China Tightens Supervision

Xinhua News Agency reported on its Website today that it learnt from the China Securities Regulatory Commission yesterday that joint efforts will be made by 12 departments including the People’s Bank of China and the China Banking Regulatory Commission to boost supervision of listed companies.

The report notes that the supervision system on the listed companies developed by CSRC is expected to integrate with corporate credit tracking system developed by the central bank.

MNCs Sign $3.5B Investment in Sichuan

The People’s Daily online reported today on its Website that 60 multinational corporations have signed 18 cooperative projects worth US$3.5 billion with Sichuan.

The 60 multinationals were invited by the Sichuan Provincial Government to take part in the Sichuan investment opportunities.

Some of the companies include General Motors., Tyco Electronics, Diageo, Wal-Mart, Siemens (China) Limited, Honeywell China Co., Procter & Gamble (China) Limited, Shell China Holdings Ltd., Sony China Limited, and Coca-Cola (China) Beverages Ltd.

Separately, the National Bureau of Statistics reported on Friday last week that China’s industrial companies reported profits increased 20.9% year-on-year in the first five months of the year to Rmb1.1 trillion.

LSE to Attract 20 Chinese Companies

China Daily reported on Saturday that the Lord Mayor of the City of London Alderman David Lewis said there were 20 Chinese companies to be listed on the London Stock Exchange by 2010, while bilateral trade is expected to advance from the current US$4.5 billion to US$6 billion by 2010.

According to Lewis, the listing is part of the deal achieved in the first China-UK Economic and Financial Dialogue held in mid-April in Beijing.

The London Stock Exchange has 74 companies listed from 20 countries of which 17 joined the bourse last year and raised $19 billion.

Gainers & Losers

Foxconn International dropped 5.3% and 54% in the January to June period.

HSBC Holdings shed 0.8% on expectations that global credit losses will continue. However, other financial stocks gained. China Construction Bank jumped 1% and Bank of Communications rose 1.3%.

Hutchison Whampoa advanced 2.1% after market watchers said the company's 3G business is likely to break even this year.

Commodity stocks rose as investors sought to hedge their position from deteriorating stock markets. Zijin Mining increased 6.8 %, CNOOC Ltd surged 2.4%.

Sinopec slipped 0.7% as crude oil for August delivery rose 1.2% to $141 per barrel.

Property companies dropped. Sun Hung Kai Properties fell 1.5% and Cheung Kong Holdings slid 2.1%.

Baosteel to Launch Steel Mill

Xinhua News Agency reported today that Baosteel Group will start its Rmb 35.86 billion joint venture in the southern province of Guangdong.

Baosteel paid Rmb 28.69 billion for 80% equity in the newly formed Guangdong Iron and Steel Group. The two smaller steel companies Guangzhou Iron and Steel and Shaoguan Iron and Steel Group will hold 20% in the newly merged company.

Chinese government has been encouraging steel companies to merge and Baosteel hopes to generate $50 billion in revenue and $5 billion in profit by 2012 and produce 80 million tons of steel annually.

Hebei Iron – Largest Chinese Steel Company

China, the world’s largest steel manufacturer has been encouraging companies to merge to improve manufacturing efficiency and lower production cost. Today, Tangshan Iron and Steel and Handan Iron & Steel merged to form the largest Chinese steel producer Hebei Iron and Steel with a production capacity of 31.6 million tons. Hebei, with the merger will be larger than Baosteel and expects to produce 50 million tons by the end of next year.