Shanghai Stocks Fall 5%, Lenovo Profit Up 65%

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

Stocks in Shanghai fell sharply as disppointed investors sold stocks of hotels, travel agencies and airlines. General lack of enthusiam among investors in Shanghai and much hoped for Olympics dividend failed to materialize as Shanghai benchmark fell nearly 5%. China first half budget surplus rose to 1.19 trillion yen as budget revenue surged 33% on higher tax and import duty collection. In earnings, Lenovo Group first quarter earnings rose 65%.

[R]6:00AM New York, 6:00PM London - China’s fiscal surpluses increase to Rmb1.19 trillion in the first half. Lenovo profit rises 65%.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index slid 0.99% or 218.99 to 21,885.21, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, shed 1.69% or 201.46% to 11,742.39. In Shanghai trading CSI 300 Index declined 4.74% or 128.98 to 2,591.46. Daily turnover on main-board fell to HK$63.9 billion from HK$75.9 billion yesterday.

Stocks in Shanghai fell sharply after elevated crude oil prices dragged airlines lower and investors’ disappointment with hospitality stocks. Air China fell 10% to 8.69 yuan, China Southern declined 10% to 6.76 yuan and China Eastern dropped 9.9% to 6.80 yuan. Beijing Capital Tourism dropped 10% to 20.43 yuan and China United Travel declined 10% to 6.44 yuan.

China Fiscal Surplus Rises to Rmb1.19 Trillion Yuan

The Ministry of Finance reported yesterday that China’s fiscal surplus rose to Rmb1.19 trillion as the budget revenue soared 33.27% from the same period a year earlier to Rmb 3.48 trillion in the six months to June, while budget expenditure rose 59.52% from a year ago to Rmb2.28 trillion.

Rising corporate income tax, which rose 41.5% to Rmb791.3 billion from a year ago, and import turnover tax mainly contributed to the increase in fiscal revenue. In the period, domestic consumption tax increased 18.4% from a year ago to Rmb134.6 billion and sales tax rose 25.6% year-on-year to Rmb405.1 billion.

China is likely to report a deficit in the second half on expenditures related to earthquake reconstruction and medical and education expenses.

China GDP to Rise 10.2% in Q3

Xinhua News Agency reported today that according to a report released by the State Information Centre today China’s GDP in the third quarter is forecasted to increase 10.2% and the consumer price index is likely to rise by 6.6%.

The consumer price index is expected to stabilize as crude oil prices and agriculture products prices decline and a rise in consumer price index is expected to stay below 8.7% surge in February.

The report also projected that fixed-asset investment nationwide will rise 27.6% from the comparable period a year ago to Rmb4.77 trillion in the third quarter. In addition, retail sales are expected to increase 20% from a year ago to Rmb2.61 trillion in the review period.

Gainers & Losers

Hong Kong stocks extended their losses on concern that demand for raw materials will decline as the global economy slows.

A gauge of freight costs for raw materials declined 4.4% and dragged shipping lines. China Cosco tumbled 10.1% and China Shipping Development slid 10.2%. Refiner Sinopec Corp rose 1.8% as crude oil prices steadied at $120 a barrel. Commodity stocks fell as gold prices tumbled. Zijin Mining shed 5.7%. Angang Steel plunged 6.4% and Jiangxi Copper slumped 4.5% as well.


Lenovo Group increased 3.2% after the company, which is also sponsoring the Beijing Olympics, reported that profit in the first quarter ended June 30 rose 65%.

HSBC Holdings declined 1.2% after insurance company AIG reported a bigger-than-expected loss yesterday. China Construction Bank shed 2.2% and China Life lost 2.4%.

Utilities gained. Hong Kong Electric edged up 2% and Hong Kong & China Gas increased 2.3%.