China Stocks Weak, HSBC Earnings Drop 29%

123jump.com Staff
04 Aug, 2008
New York City

Stocks in Shanghai and Hon Kong fell sharply after the global markets worried persisted in trading. Benchmark indexes in Hong fell 1.5% and in Shanghai dropped 2.4%. Service industry index rose 1.2% in July on rising construction activities ahead of the Olympic Games in Beijing. HSBC operating revenue fell 2% and earnings in the first half dropped 29% on 58% rise in loan loss provision in the period. Stocks of shipping lines and steel makers fell on the expectations of weak demand.

[R]6:00AM New York, 6:00PM Hong Kong – Stocks in Shanghai and in Hong Kong fall on the weakness in the European and U.S. trading. HSBC first half profit falls 29%.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index shed 1.52% or 347.68 at 22,514.92, and China Enterprises Index of Hong Kong listed mainland shares, or H shares, slipped 1.98% or 248.63 at 12,296.59. In Shanghai trading CSI 300 Index declined 2.38% or 67.64 at 2,773.15.

Daily turnover on main-board was HK$49.1 billion compared with HK$60.7 billion on Friday last week.

Beijing’s GDP to Rise to Rmb1 trillion in 2008

Xinhua News Agency reported today on its Web site that according to the deputy director of the Municipal Development and Reform Commission Wang Haiping, Beijing’s gross domestic product is forecasted to cross Rmb1 trillion or $146 billion in the current fiscal year as the Olympic Games contribute to the economic activities of the city. The GDP estimate is significantly higher than the Rmb900 billion recorded last year.

Wang explained that the city’s GDP per capita has increased from $3,262 in 2001 and is projected at $8,000 this year.

Beijing Statistics Bureau indicated that city GDP in the first-half gained 11% from a year ago to Rmb497.3 billion.

Last week, the municipal government said it has spent Rmb13 billion to construct 31 competition venues, 45 training venues and other Games facilities.

Service Industry Index Rise 1.2% in July

The China Federation of Logistics and Purchasing reported on its Web site today that the Purchasing Manager’s Index non-manufacturing industries spiked 1.2% at 58.1 from the same period a year earlier.

Then index mainly gauges both the construction and service industries and has risen ahead of the Olympic Games. In the month, customer service index was at 54.9% and construction business rose to 68.3%.

China Industry Association Requests to Reject BHP, Rio Deal

China Iron and Steel Association in a report to the Ministry of Commerce urged the government to reject the merger between BHP Billiton and Rio Tinto. The merged company will control as much as 40% of iron ore export to China.

HSBC Earnings Fall 29%

HSBC Holdings reported first half operating income increase of 2% to $42.9 billion and profit attributable to shareholders declined 29% to $7.72 billion from $10.89 billion a year ago. Return on shareholder’s equity dropped to 12.1% from 19.1% in the first half a year ago.

In the period the bank increased its loan impairment charges and other credit risk provisions by 58% or $3.7 billion to $10.058 billion from or $6.3 billion a year ago.

The bank reported tier 1 capital ratio of 8.8% and total capital ratio of 11.9%.

Gainers & Losers

Shipping lines slumped on the speculation that raw materials demand may fall. Cosco Pacific plunged 5.9% and China Shipping Container Lines fell 4.6% as a result.

Commodity stocks declined. Maanshan Iron & Steel tumbled 6.3%, Angang Steel declined 5.4% and Baoshan Iron & Steel slipped 4.9%.

HSBC Holdings remained unchanged as the company’s first-half profit slipped 28% to $10 billion and Hang Seng Bank dropped 2%.

China Mobile and China Life declined 1.2% and 1.7% respectively. Refiner Sinopec Corp edged down 2.3% as oil prices rose to $126 a barrel.

Exporter Li & Fung Ltd. slumped 3.4%. China Shenhua Energy slipped 3% and China Coal Energy plunged 2%.