Hong Kong Stocks Fall 1.8%, Ping An Down 10%

123jump.com Staff
02 Jul, 2008
New York City

Ping An Insurance fell daily limit of 10% after talks of potential loss of 12 billion yuan at one of the funds managed by the company sparked sell-off and dragged China Life down 5%. Stocks in Shanghai were unchaged but hovered near 49% loss for the year as investors shied away from the market. Hong Kong stocks fell 1.8% after Cathay Pacific suggested that first half profit will be lower than market estimate.

[R]6:00AM New York, 6:00PM Hong Kong – Hong Kong stocks fall 1.8%. China’s futures trade volume gains 142% to Rmb35 trillion in first half.[/R]

Stocks in Hong Kong fell as investors were wary of negative earnings forecasts from companies after Cathay Pacific cautioned that its first half earnings will be below market projections.

Market Sentiment

In Hong Kong trading Hang Seng Index fell 1.80% or 397.56 at 21,704.45, and the China Enterprises Index or Hong Kong listed mainland shares, or H shares, slumped 2.53% or 300.83 at 11,608.92. In Shanghai trading CSI 300 Index gained 0.05% or 1.25 at 2,699.60. Talks of large loss of 12 billion yuan or $2.45 billion in a fund managed by Ping An Insurance on the mainland sparked a flurry of sell orders in insurance companies.

Ping An Insurance fell daily limit of 10% or 4.8 yuan to 43.04 yuan and China Life fell 1.12 or 5% to 21.14 yuan.

China’s Trade Volume Tops Rmb35 Trillion

Xinhua News Agency reported today that China Futures Association said China’s futures trade volume advanced 142% to Rmb35 trillion in the first half of the year. Nationwide contracts in the futures markets gained 148% to 577 million.

Futures volumes surged on improved domestic market environment and volatile domestic farm product prices lifted by a rise in world grain prices.

ICBC Provides Rmb8.06 billion For Sichuan

Industrial and Commercial Bank of China said it has provided Rmb8.06 billion in loans to companies and public utilities for reconstruction in the aftermath of the earthquake that hit Sichuan Province.

The report notes that the ICBC has signed a financing agreement with the municipal government of Chengdu for supporting reconstruction projects. Statistics reveal that China’s financial agencies had issued a total Rmb52.95 billion in reconstruction loans by Sunday.

Beijing also allocated Rmb54.82 billion to a disaster relief fund that includes Rmb49.71 billion from the central budget and the remainder from local budgets.

China’s Economy Set to Cool

The online edition also reported that the macro economy index chart- filed by the National Bureau of Statistics- was unchanged from the previous four months at 113.3 from 120 recorded in September to December period last year.

In addition, the chart indicated that there is lingering inflationary pressure in the economy.

However, the May index projected economic growth dropped 0.15 points from April to 102.35 in May, intimating that the economy will cool further.

Beijing has been tightening its monetary policy since the beginning of the year.

Gainers & Losers

Cathay Pacific plunged 5.9% and Swire Pacific tumbled 5.7%.

Aluminum Corp of China fell after saying it projects interim profit will drop 50% after snowstorms impacted on output. Zijin Mining spiked 3.6% after metal prices extended their ways.

HSBC declined 1.9% at HK$118.60 on worries of more write downs. CNOOC gained 4.8% as crude oil for August delivery advanced 1.1% to $142.45 a barrel. Sinopec Corp fell 3.6% and Petrochina declined 2.3%.

Analysts estimate continued losses at refiners even after the recent increase in prices approved by China. On June 20, China approved price hike by 1,000 yuan per ton for diesel and gasoline and 1,500 yuan per ton of aviation kerosene.

CNPC, China National Petroleum Corp, the parent of PetroChina plans to increase the crude oil processing by 3% to 88,000 tons in the third quarter. CNPC produced 17.6 million tons of gasoline and diesel and kerosene last year.

Daily turnover on main-board was HK$76.3 billion from HK$53.06 on Monday and daily turnover on exchanges in Shanghai and Shenzhen was 65.4 billion yuan.

Financial stocks tumbled as well. China Construction Bank plunged 2.2%, ICBC slid 2.1% and China Life edged down 3.5%.

Chinese Freight Rates Rise

Chinese railroad companies increased fares for goods transport. The fares will rise between 5.70 yuan and 14.8 yuan per ton and an additional charge of per kilometer of between 0.03 yuan and 0.07 yuan. The transportation charge for a container of 20 foot length will now cost 219 yuan and 1.0374 per kilometer and 40 foot container will cost 429.80 yuan and 1.6374 yuan per kilometer.