Market Updates
Stocks in HK, Shanghai Down 4%; Reserves Up
123jump.com Staff
15 Jul, 2008
New York City
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Stocks in China fell with a decline in regional markets, tracking losses in the U.S. and Europe. Benchmark indexes in Hong Kong and Shanghai fell 3.8% and 4.2% respectively. Chinese smelters of lead and zinc will lower production by 10% between July and September. China hopes to lift metal prices with lower supply and also divert electricity to support the Olympic Games. Foreign exchange reserve rose to $1.8 trillion at the end of June, 36% rise from a year ago.
[R]6:00AM New York, 6:00PM Hong Kong - China zinc and lead smelters to cut production by 10% between July and September as China diverts electricity to support the Olympic Games.[/R]
Hong Kong stock indexes traded in negative territory after nervous investors sold stocks on the news of a rescue plan of US mortgage lenders Freddie Mac and Fannie Mae.
Market Sentiment
In Hong Kong trading Hang Seng Index fell 3.81% or 839.69 at 21,174.77, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, declined 4.72% or 579.56 at 11,687.32. In Shanghai trading CSI 300 Index plunged 4.13% or 122.90 at 2,852.98.
Daily turnover on main-board was HK$65.8 billion compared with $58.4 billion yesterday.
China’s Reserve Rise to $1.8 trillion
The People’s Bank of China announced yesterday that China’s cumulative foreign exchange reserves advanced 35.73% from a year ago to $1.8 trillion, while the reserve increased $11.9 billion in June from $28.1 billion in the comparable period a year ago.
Statistics from the bank also show that foreign reserves in the six months to June advanced $14.2 billion from the same period last year to $ 280.6 billion.
Chinese Smelters to Cut Production
China Daily reported today on its Web site that the Shanghai Nonferrous Metals Trade Association said yesterday that China’s 27 zinc and lead smelters have agreed to cut production by 10% between July and September in order to increase market prices and “relieve electricity shortages”.
According to the association Sichuan Hongda Co Ltd and Henan Yuguang Gold & Lead Group Co Ltd were among the companies that have signed up to the deal.
However, the country''s top zinc producers, Hunan Zhuzhou Smelter Group Co Ltd and Huludao Zinc Industry Co Ltd are not on the list.
“When cutting production, companies can make some maintenance work. They can also save some electricity to support the coming Olympic Games and the development of other industries.
“Domestic companies should take further measures such as energy conservation and management improvement to lower their costs,"""" said the association in a statement.
The move by Chinese lead and zinc producers comes in the wake of China''s aluminum smelters agreement to reduce production through September because of power shortages and to ensure supplies for the Beijing Olympics.
According to China Nonferrous Metals Industry Association, China’s lead consumption from January to May this year fell to 50,000 tons.
Gainers & Losers
Financial stocks fell as the U.S. Federal Reserve Bank mulled plans to inject $15 billion into two troubled mortgage lenders Freddie Mac and Fannie Mae.
HSBC Holdings dropped 3% as worries about the U.S. banking sector after Friday''s collapse of IndyMac haunted the market.
ICBC fell 4.3% and China Construction Bank slumped 4.5% as well, while Insurer China Life shed 5.3% and Ping An declined 7.1%.
Hong Kong Exchanges & Clearing tumbled 7.1% reflecting the general market sentiment.
Aluminum Corp of China plummeted 7.6% to HK$8.27 and Sinopec Corp slid 3.7% after Morgan Stanley downgraded the stock to “underweight” from “equal weight” and cut its earnings estimates by 50% to 63% for the next three years on rising oil prices.
Li & Fung fell 5.8% after Goldman Sachs removed the company from its conviction buy list, but Esprit Holdings edged up 0.5% after reporting that the company has bought back 1.65 million shares for HK$127.8 million.
Huaneng Power International was suspended from trade on news that the company experienced an unexpected first half loss.
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