Shanghai Falls 2.9%, Profit Growth Declines

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

Stocks in Hong Kong edged lower but in Shanghai dropped 2.9% and dragged the CSI 300 index to a new low in the last fifteen months. Stocks struggled as companies battle a decline in revenue and earnings growth and tighter lending conditions. Chinalco received Australian government approval to increase its stake to 11% from 9%.

[R]6:00AM New York, 6:00PM Hong Kong – Chinalco gets approval to raise stake in Rio Tinto to 11%.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index slipped 0.23% or 48.13 to 21,056.60, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, rose 0.73% or 82.39 to 11,406.64. In Shanghai trading CSI 300 fell 2.88% or 69.02 to 2,331.53.

China Gets Regulatory Approval for 11% Stake in Rio

China Daily Online reported on its Web site today that the Aluminium Corp of China or Chinalco has received regulatory approval from Australia to increase its stake in Rio Tinto Group to 11%.

Initially Chinalco, in partnership with Alcoa, increased its stake in Rio to 9% in February this year. Chinalco is increasing its stake in the Rio Tinto to block the hostile takeover from BHP Billiton worth US$143 billion.

China’s Companies H1 Profit Falls

Xinhua News Agency reported today on its Web site that the Shanghai Securities News said listed companies profits growth rate declined in the first half of this year to less than half the rate than in the first half in the year 2007.

Domestic economy grew at 10.4% in the first half of this year compared to 12.2% rate in the first half a year ago.

According to the report, of the listed companies 1,178, or 72.8% of the total, have released interim statements and profit growth at these companies declined to 31% to Rmb323 billion or $47.2 billion compared to 70% surge in the period a year ago. Revenue in the first half rose 28% to Rmb 3.13 trillion and operating cash flow declined 60% in the period from a year ago.

Economists are estimating annual profit growth at the end of the reporting period between 20% and 30%.

Gainers & Losers

Stocks in Hong Kong fell on weaknesses in telecommunication and financial stocks on signs that credit woes are still prevalent on the global financial markets.

China Unicom fell 7.1% after the company reported that it will increase is spending on expansion on networks and equipment. Emerging markets research company CLSA downgraded the stock.

China Netcom Group shed 5.2% to HK$19.90.

The Bank of East Asia declined 1.5% to HK$30.40 after reporting interim profit fell 52% on $167.8 million of losses related to credit market investments. HSBC Holdings Plc declined 1.4% to HK$119.80.

Cheung Kong Infrastructure Holdings Ltd. plunged 2.2% to HK$36 after agreeing to buy BlueScope Steel Ltd''s iron export business in New Zealand.

China Life Insurance Co. increased 2.2% to HK$28.45.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 99.95 or 0.78% to 12,778.71, , Hang Seng index in Hong Kong decreased 48.13 or 0.23% closed to 21,056.66.ASX 200 index in Australia decreased 7.40 or 0.15% to close 5,007.50. The KL Composite index in Malaysia decreased 8.23 or 0.76% closed to 1,070.50.

The Kospi Index in South Korea decreased 11.86 or 0.79% to close at 1,490.25, SET index in Thailand closed lower 9.28 or 1.37% to 668.92 and JSE Index in Indonesia decreased 19.68 or 0.92% to 2,107.55. The Sensex index in India increased 31.87 or 0.22% closed to 14,482.22.