China Hikes Coal Duties, Stocks New Lows

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

Stocks in Hong Kong and Shaghai fell to new lows after China hiked export tariffs on metallurgical coals. The Beijing move may improve supply of coals for the domestic steel industry and restrict the sale of coal to the international markets. Hang Seng dropped 2%, and reached to a new low in the last twelve months of trading and CSI 300 in Shanghai fell 1.5%, another low in the last nineteen months of trading. Property stocks fell on weak expectations of Cheung Kong earnings.

[R]6:00AM New York, 6:00PM Hong Kong- China hikes coke export tariffs to 40%.[/R]

Hong Kong stock indexes fell with a weakness in property stock on a speculation that Cheung Kong Holdings’ interim profits will be below market forecasts.

Market Sentiment

In Hong Kong trading Hang Seng Index declined 2.13% or 446.30 to 20,484.37, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, dropped 2.30% or 251.93 to 10,714.44. In Shanghai trading CSI 300 Index fell 1.52% or 35.07 to 2,348.47.

Hang Seng index is now trading at one-year low and Shanghai index is trading at 19-month low. Daily turnover on main-board was HK$24.3 billion compared with HK$45.2 billion yesterday.

Export Tariff on Coke Hiked to 40%

China Daily online reported on its Web site today that the Ministry of Finance said in a statement yesterday the export tariff on coke has been raised to 40% from 25%, while the rate on coking coal has been hiked to 10% from 5% and tariffs on other metabituminous coal has been set at 10%.

According to the finance ministry, the increases are effective from today. Beijing’s move is expected to improve coke supply in the domestic market and to cushion downstream industries and the steel industry in China. Exports rose to a record at 1.6 million tons in May this year.

Official statistics show that China coke production accounts for 70% of the world’s total.

China Auto Exports Eases

Xinhua News Agency reported on its Web site today that General Administration of Customs said motor vehicles exported from China rose 58.5% to 361,000 from the same period a year ago in the January-June period.

The increase was however 17.1 percentage points lower than last year on slowing demand from the U.S., rising oil prices, the appreciation of the yen, soaring production costs, including difficulties in accessing markets such as Russia and Venezuela.

The report notes that the exports were valued at $4.62 billion, reflecting an increase of 89% on the year, but the growth rate was 28.2 percentage points lower than a year ago.

Motor vehicles sold to Russia advanced 26.2% to 48,000 motor vehicles, while sales to ASEAN members and Vietnam gained 270% to 54,000 units and 300% to 46,000 units respectively.

Gainers & Losers

Hong Kong stocks fell as investors forecasted that Cheung Kong Holdings’ interim profits will be below the market consensus. Cheung Kong''s net profit may fall 67% to HK$6.1 billion in the period. The stocks fell 3.5%. Sun Hung Kai Properties shed 3.2% and Sino Land declined 4.9%.

Huaneng Power spiked 3.2% after Goldman Sachs removed the stock from its conviction sell list on the expectations that China will increase its power tariffs by 5.3% in September. Datang Power edged up 4.9% and China Resources Power rose 4.8% as a result.

Oil refiner Sinopec Corp increased 1.3%, but oil producer CNOOC declined 2.7% as oil prices plummeted.

China Merchants Bank advanced 0.2% after reporting that interim profit in the period ended June 30 advanced 116% to Rmb13.245 billion.

Ping An Insurance rose 3.3% and ICBC gained 1%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 300.40 or 2.28% to 12,865.05, Hang Seng index in Hong Kong decreased 446.30 or 2.13% closed to 20,484.37. ASX 200 index in Australia decreased 118.60 or 2.38% to close 4,866.40. The KL Composite index in Malaysia decreased 14.94 or 1.38% closed to 1,069.42.

The Kospi Index in South Korea decreased 26.30 or 1.68% to close at 1,541.41, SET index in Thailand closed lower 5.90 or 0.85% to 691.33 and JSE Index in Indonesia decreased 42.65 or 2.05% to 2,042.50. The Sensex index in India decreased 101.93 or 0.70% closed to 14,543.73.