Commodities Drag China Stocks Lower

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

Stocks Hong Kong edged higher but in Shanghai fell a fraction. Financial stocks were mixed after a sharp loss at AIG but better than expected earnings at Standard & Chartered. Airlines, commodities and shipping lines fell. Shipping lines fell after Baltic Dry Index fell for the fourth week in a row. China Cosco, CSCL and CSD dropped nearly 6%.

[R]6:00AM New York, 6:00PM Hong Kong – A fall in commodities, shipping lines and airlines limit Hang Seng.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index increased 0.70% or 154.45 to 22,104.20, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, fell 0.03% or 3.79 to 11,943.85. In Shanghai trading CSI 300 Index declined 0.05% or 1.25 to 2,720.44.

Daily turnover on main-board was HK$75.9 billion compared with HK$64 billion on Tuesday. Markets were closed on the account of a possible tropical storm.

China Launches Environment and Energy Exchanges

The China Daily Online reported on its Web site today that the environment and energy exchanges were launched yesterday in Shanghai and Beijing in an endeavour to increase efforts in emission cutting and energy conservation.

According to the report, the two exchanges will “collect, filter and publicise information for the environment and energy-related equity and emission credit trading, and provide a platform for such deals between companies or institutions”.

Also part of the services that the exchange will offer include consultancy, project design and evaluation, fund operation and technical support to equity owners, energy reservation integrators, research companies and investment institutions.

Currently, Shanghai United Assets and Equity Exchange (SUAEE) is the sole owner of the environment and energy exchange. The United Nation estimated that China provided one-third of the world’s carbon emission reduction volume last year.

Gainers & Losers

Stocks in China rose fractionally and were weighed by the continued decline of commodity stocks as demand for raw materials weakened in China due to the closure of heavy industries ahead of Olympics this week.

Commodity stocks and shipping stocks fell as a result.

Shipping lines China Cosco declined 5.8%, China Shipping Development plummeted 7.9% and China Shipping Container Lines plunged 5.8% as the Baltic Dry Index, which gauges freight costs for raw materials, slumped for the fourth week.

Financial stocks were mixed. HSBC rebounded to close up 1.8% and the Hang Seng Bank edged up 3.2% after Standard Chartered posted forecast-beating results in the first half. Bank of East Asia declined 1.5% after profits eased.

Airlines fell as well. Cathay Pacific Airways shed 3.9% on lower profits and Air China shed 6.6%.

CNOOC lost 0.9% after crude oil prices stayed at $119 a barrel, and Sinopec Corp climbed 1.1%.

Commodity stocks fell on declining demand. Jiangxi Copper plunged 5.5%, Angang Steel plummeted 5.4% and Hunan Nonferrous Metals Corp shed 11.4% to HK$1.56 after the company said it expects first half net profit to fall significantly.

Exporter Li & Fung gained 3.1% and retailer Esprit increased 3.8%. Also Cheung Kong Holdings spiked 0.6%, while Wharf Holdings rallied 4.7%.

Lenovo Group dropped 2.6% on expectations that profit will slow to 60% rise in the quarter to June.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 129.90 or 0.98% to 13,124.99, Hang Seng index in Hong Kong increased 154.45 or 0.70% closed to 22,104.20. ASX 200 index in Australia increased 14.20 or 0.29% to close 4,983.30. The KL Composite index in Malaysia decreased 4.03 or 0.36% closed to 1,129.56.

The Kospi Index in South Korea decreased 14.71 or 0.93% to close at 1,564.00, SET index in Thailand closed higher 29.00 or 4.29% to 705.35 and JSE Index in Indonesia increased 11.81 or 0.54% to 2,199.01. The Sensex index in India increased 43.71 or 0.29% to 15,117.25.