Stimulus Hopes Lifted China Indexes

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

China increased the prices paid to power plants by grid operators for the second time in two months. The 6% increase was lower than required to maintain profitability and power companies stocks fell. The largest grid operator State Grid Corp of China hopes that China will allow it to pass on the hike to customers to stem losses. Banks, insurance realty and energy companies in Hong Kong trading surged.

[R]6:00AM New York, 6:00PM Hong Kong - China to unveil a stimulus package of as much as Rmb 400 billion. China hikes power rates for the second time in two months.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index gained 2.18% or 446.89 to 20,931.26, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, advanced 4.34% or 464.72 to 11,179.16. In Shanghai trading CSI 300 Index jumped 7.85% or 184.47 to 2,532.94.

Daily turnover on main-board was HK$62.3 billion from HK$48.5 billion yesterday.

China to Shell Rmb3.51 billion for SMEs

Xinhua News Agency reported on its Web site today that the Ministry of Finance reported yesterday that the country will shell out Rmb3.51 billion to support domestic small and medium scale enterprises.

Beijing has prioritized resourcing SMEs as part of the grand program to create employment. China has pledged to put 10 million urban dwellers into employment this year. Official statistics show that China has invested an estimated Rmb17 billion through 2008 to establish six special funds ranging from technology, marketing to agriculture sciences.

People’s Bank of China said recently that the country’s financial institutions will raise the ceiling on small-scale mortgage loans from Rmb1 million to Rmb2 billion in order to capacitate them.

Sichuan Province to invest Rmb80 billion in Tourism

Xinhua News Agency reported on its Web site that Sichuan Province Bureau director Zhang Gu said the province will invest Rmb80 billion to rehabilitate its tourism sector, adding that a post-quake reconstruction plan involving 300 projects has since been completed. The money will be used to rebuild roads, hotels, restaurants and scenic spots.

Gainers & Losers

Hong Kong stocks rose markedly after JP Morgan Chase reported that China is working on an economic stimulus package of between Rmb 200 billion and Rmb 400 billion to ease conditions in the financial markets. Stocks were further buoyed by expectations that the People’s Bank of China will further ease its monetary policy.

Financial and insurance stocks gained. China Construction Bank rose 3.6%, ICBC gained 3%, China Life advanced 4.3% and PICC Property & Casualty gained 5.3%.

Realty stocks gained. Cheung Kong increased 2% to HK$104.00, Sun Hung Kai Properties advanced 0.87% and Sino Land rose 3.2%.

Power companies dropped after China hiked its power tariffs by 5% for the second time in as many months. Huaneng Power slid 4.5% and Huadian Power fell 10%.

Tsingtao Brewery Co Ltd gained 7.6% after reporting interim profit increased 41.9% and also on an investor upgrade.

China National Building Material climbed 20% to HK$12.10 after the company reported that first half profit will be robust on the back of rising cement and engineering services.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 13.36 or 0.10% to 12,851.69, Hang Seng index in Hong Kong increased 446.89 or 2.18% closed to 20,931.26. ASX 200 index in Australia increased 63.10 or 1.30% to close 4,929.50. The KL Composite index in Malaysia increased 3.79 or 0.35% closed to 1,073.21.

The Kospi Index in South Korea decreased 0.70 or 0.05% to close at 1,540.71, SET index in Thailand closed lower 1.28 or 0.19% to 690.05 and JSE Index in Indonesia increased 27.20 or 1.33% to 2,069.70. The Sensex index in India increased 134.50 or 0.92% closed to 14,678.23.