Earnings Dominate China, HK Trading

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

Stocks in Hong Kong and in Shanghai edged higher after several leading companies reported better than expected earnings. China Life, China Mobile, China COSCO and Jiangxi Copper reported better than expected earnings. Coal companies also gained on news that China will strengthen its enforcement of price caps on thermal coal. China Shenhua surged 5.7% and China Coal edged up 6.3%.

[R]6:00AM New York, 6:00PM Hong Kong – China Life, China Mobile, China COSCO and Jiangxi Copper rise after earnings.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index rose 1.94% or 408.06 to 21,464.72, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, advanced 3.28% or 374.27 to 11,780.91.In Shanghai trading CSI 300 Index shed 0.27% or 6.24 to 2,325.29.

Daily turnover on main-board was HK$61 billion compared with HK$48 billion yesterday.

China to Support SMEs

China Daily Online reported on its Web site today that Beijing is introducing a raft of measures that are meant to finance small to medium enterprises that are presently being confronted by rising oil and raw materials costs, including low financing as banks opt to support large state-owned prices that are deemed as credit worthy.

Statistics from the National Development and Reform Commission indicate that an estimated 15% of SME’s had an average 15 percentage point drop in industrial output growth from a year earlier to 30% in the first quarter.

Monetary tightening measures by the People’s Bank of China have compounded the woes of the sector, with total loans obtained in the first quarter falling by Rmb30 billion from a year ago.

About Rmb300 billion of the total of Rmb 2.2 trillion extended by commercial banks in the first quarter was earmarked for SME’s. In Wenzhou, in Zhejiang province, which harbors the biggest number of SMEs in China, 16 new microcredit lenders are being established.

Daily Sales on Beijing Market Rise 17% During Olympics

Xinhua News Agency reported on its Web site today that sales in Beijing averaged Rmb190 million per day during the Olympics, which reflects a rise of 17% from the same period a year earlier.

An estimated one million people visited the first floor Silk Street Mall in Beijing spurring sales to Rmb383 million.

Restaurants such as Quanjude and Bianyifang also managed to generate significant earnings.

Gainers & Losers

Stocks in Hong Kong rose on the back of stronger earnings from China Mobile and China Life and also buying ahead of the index futures expiry tomorrow.

China Life edged up 4.9% as half profit fell by 35% which is less than forecasted.

CNOOC rose 3.8% after oil prices advanced $117 per barrel on speculation that Hurricane Gustav will reach the Gulf of Mexico. PetroChina also gained 3.4%.

Coal companies also gained on news that China will strengthen its enforcement of price caps on thermal coal. China Shenhua surged 5.7% and China Coal edged up 6.3%.

China COSCO Holdings Co Ltd jumped 8.2% after interim profits increased to Rmb15.12 billion. Also Jiangxi Copper Co Ltd soared 9.5% after first half profit increased 32%.

Tsingtao Brewery gained 22%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 25.75 or 0.20% to 12,752.96, , Hang Seng index in Hong Kong increased 408.06 or 1.94% closed to 21,464.72.ASX 200 index in Australia increased 3.70 or 0.07% to close 5,011.20. The KL Composite index in Malaysia decreased 2.85 or 0.27% closed to 1,067.65.

The Kospi Index in South Korea increased 3.67 or 0.25% to close at 1,493.92, SET index in Thailand closed higher 7.07 or 1.06% to 675.99 and JSE Index in Indonesia increased 23.52 or 1.12% to 2,131.06. The Sensex index in India decreased 185.43 or 1.28% closed to 14,296.79.