Shanghai Drops 4%

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

Stocks in Shanghai fell sharply but in Hong Kong edge higher. Huaxin Cement reported first sales rise of 31% to 2.7 billion yuan and net income increased 74% to 191 million yuan or 0.50 yuan per share. Shanghai Electric Power probably lost money in the first half after record coal prices. Huaneng Power also estimated loss in the first quarter. Casino stocks Melco Entertainment and Galaxy Entertainment fell 6% on tighter travel restrictions for mainland visitors.

[R]6:00PM New York, 6:00PM Hong Kong - Stocks in Hong Kong rose and Shanghai fell.[/R]

Hong Kong market averages gained fractionally after investors bought blue-chips that had been on the decline for the past two trading sessions.

Market Sentiment

In Hong Kong trading Hang Seng Index rose 0.23% or 48.73 at 21,223.50, and China Enterprises Index of Hong Kong listed mainland shares, or H shares, increased 0.25% or 29.46 at 11,716.78. In Shanghai trading CSI 300 Index declined 3.76% or 107.38 at 2,745.60.

Daily turnover on main-board dropped HK$59.8 billion from HK$65.8 billion yesterday.

China’s Capital Markets 2007 Rise

Xinhua News Agency reported on its Website yesterday that the recent Grant Thornton Asia Pacific Capital Markets Guide 2008, which was released by a Hong Kong based accounting agent Grant Thornton, indicated that China’s leading capital markets in Shanghai, Shenzhen and Hong Kong achieved phenomenal growth in the region in 2007.

The report included the performance of 21 largest stock exchanges in the region between 2005 and 2007.

The report noted that Shanghai Exchange became the largest capital market in China and the second biggest in the region after Japan in terms of market cap. Shanghai is forecast to surpass the Tokyo Stock Exchange in the long term.

Also statistics indicated that Shenzhen exchange experienced a four-fold rise in market capitalization in 2.5 years from $116 billion in December 2005 to $489 billion in June 2008.

Benchmark index that tracks Shanghai and Shenzhen have plunged from their peaks in October as much as 60% by the end of the first half, increasingly turning away retail investors from stocks in local companies.

China Mulls Subsidies to Air Conditioners Manufacturers

China Daily reported today that the National Development and Reform Commission has begun drafting a subsidy scheme for users and manufacturers of energy efficient air conditioners as part of a dual pronged intervention to save energy and protect the environment.

The Commission has also invited submissions from manufacturers on ways to promote the use of energy-saving air conditioners.

Recent forecasts for the State Information Center indicated that total domestic sales of air conditioners in 2008 will increase 5% to 7% from a year ago to 27 million to 30 million.

Gainers & Losers

Commodity stocks traded mixed with oil producer CNOOC falling 3.3% as crude oil slumped 4.4% to $138.74 on comments by the U.S. Federal Reserve Bank Governor Ben Bernanke that there still remains significant downside to global economic growth. However, Sinopec Corp advanced 2% on expectation that the easing oil prices will reduce refining losses.

Cathay Pacific rose 1.7% and retailer Li & Fung edged up 4.1% also on oil prices.

Esprit Holdings jumped 4.3% after its management acquired shares worth HK$197 million over the last two days in the company''s first share buyback.

China Mobile surged 1.6% after dropping yesterday.

Huaneng Power shed 1.6% after the company reported yesterday that it may report losses in the first half on high coal prices.

Casino stocks fell after Macau announced travel restrictions for mainland visitors. Galaxy Entertainment declined 6.1% and Melco International Development slipped 6.9% as a result.

China Communications Services Corp Ltd climbed 3.9% after Goldman Sachs upgraded the stock to “buy” from “neutral” after the banker lifted its estimate of China''s telecoms industry capital expenditure to15% from 6% between 2008 and 2010.