Shanghai Stocks Up on Lower Oil

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

Stocks in Shanghai gained as crude oil prices fell. Hong Kong markets were closed on impending tropical storm. China increased its loan quotas for regional banks for small and medium companies after the credit markets tightening affected lending to the sector. Oil refiners, airlines and chemical companies rose after the recent drop in crude oil future prices. Commodity stocks fell after gold prices plummeted 2.4% to $886.10 an ounce. Zjin Mining Group Co. fell 2.7%.

[R]6:00AM New York, 6:00PM Hong Kong -Stocks in Shanghai rise 0.6% on declining oil prices.[/R]

Stocks in China rose led by oil refiners and airliners as crude oil prices dropped 0.8% to $118.25 a barrel. The recent drop in crude oil prices will help in controlling inflation but it is still expected to stay at elevated levels.

Market Sentiment

In Shanghai trading CSI 300 Index advanced 0.6% or 18.61 at 26,721.60. Hong Kong markets were shut for trading today due to a tropical storm.

China Raised Loan Quota to Fund SMEs

The China People’s Daily reported today on its Web site that the People’s Bank of China informed all commercial banks that their annual loan quota has been raised to help fund small and medium enterprises that have borne the brunt of the monetary tightening measures of the authorities.

Loan quota was raised between 5% and 10% for national commercial banks and local commercial banks respectively. Local commercial banks are widely seen as the major loan providers for SMEs that will help alleviate capital shortages and provide impetus for growth.

Economists believe that channeling loans to SMEs will help prop up manufacturing and export sectors amid a slump in demand and the appreciation of the renminbi.

ICBC to Establish Branch in New York

Xinhua News Agency reported that Industrial and Commercial Bank of China received a permission to open a new branch in New York. The branch will be involved in the commercial banking business and will be used to develop the business and promote trade, science and technology, and cultural exchange between the two countries.

Gainers & Losers

Oil refiners increased after crude oil prices extended losses by 0.8% to $118.25 a barrel. China Petroleum & Chemical Corp. surged 3.2% and PetroChina Co., advanced 1.3%.

Airlines also rose as well. Air China edged up 1.6% and China Southern Airlines Co spiked 1.7%.

Financial stocks gained tracking the general market sentiment. Citic Securities rose 2.7% and Merchants Bank rallied 1.9%.

Commodity stocks fell after gold prices plummeted 2.4% to $886.10 an ounce. Zjin Mining Group Co. fell 2.7% and Zhongjin Gold Corp, shed 3.3% as a result.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 340.23 or 2.63% to 13,254.89. ASX 200 index in Australia increased 148.70 or 3.08% to close 4,969.10. The KL Composite index in Malaysia increased 4.73 or 0.42% closed to 1,133.59. Hong Kong market was closed today.

The Kospi Index in South Korea increased 43.17 or 2.81% to close at 1,578.71, SET index in Thailand closed higher 9.23 or 1.38% to 676.35 and JSE Index in Indonesia increased 1.59 or 0.07% to 2,187.20. The Sensex index in India increased 112.47 or 0.75% to 15,073.54.