HK Retail Sales Up, Chalco Earnings Fall

123jump.com Staff
01 Sep, 2008
New York City

Hong Kong stocks fell led by technology companies after personal computer maker Dell fiscal second quarter profit slumped 17%. Aluminum Corporation of China Limited, the largest producer of aluminum said first-half revenues dropped 64.08% to Rmb3.5 billion. Net profit in the quarter declined 65.56% to Rmb2.4 billion or Rmb18 per share.

[R]6:00AM New York, 6:00PM Hong Kong- Dell earnings decline dragged electronic contractors and broader indexes lower.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index fell 1.67% or 355.58 to 20,906.31, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, declined 1.93% or 225.55 to 11,438.88. In Shanghai trading CSI 300 Index slipped 3.45% or 82.47 to 2,309.17.

Daily turnover on main-board was HK$41.1 compared with HK$63.4 billion on Friday last week.
Retail sales in July in Hong Kong rose 13.8% from a year ago to HK$24.2 billion on tourist spending and low unemployment. Retail sales by volume rose 6.6% in the month and after gaining 4.1% in June. The unemployment for the three months ending in July fell to 3.2% for a city of 7 million people and visitors arriving in July, mostly from the Mainland rose 10.4% from a year ago.

China to Tighten Credit for Property Projects

Xinhua News Agency reported on its Web site recently that authorities in China - the People’s Bank of China and the China Banking Regulatory Commission - have heightened efforts to eliminate risks that could hurt the banking sector by promoting extensive credit management of commercial property projects. The policy might negatively impact on property developers, as it will make financing difficult.

Under the new arrangements, no loan will be given to developers to cover land transfer costs and loans for land reserve acquisition will be secured by property developers through the use of a mortgage and require a legal land use certificate.

In addition to the credit period being restricted to two years, the amount of the loan should be less than 70% of the estimated value of the project.

According to the report, the provision of credit will be more cautious to government-approved construction projects that haven’t commenced one year after a land concession contract is signed, while no credit will be provided for projects where land has been idle for two years.

The nationwide credit for commercial real estate rose 22.5% to Rmb5.2 trillion in the first six months of the year, reflecting 15% to 20% of the total assets of the banking sector.

Monetary authorities have also called for financial support for indemnificatory housing construction and have urged that strict credit management on rural collective land for construction should be enhanced.

China to Spearhead Investment in 5 Key Areas

China Daily online reported on its Web site last week that China’s Ministry of Industry and Information Technology said the company will spearhead development in agriculture, economic restructuring, energy saving and emission reductions, independent innovation and social undertakings in order to ensure steady and sustainable economic development.

The government’s policies will be tilted towards companies with advanced technologies and sound development foundations and help them from the prevalent inauspicious circumstances such as rising energy prices and falling demand.

Chalco Profit Falls

Aluminum Corporation of China Limited, the country''s largest producer of primary aluminum said first-half revenues dropped 64.08% to Rmb3.5 billion. Net profit in the quarter declined 65.56% to Rmb2.4 billion or Rmb18 per basic share.

Aluminum Corporation of China Limited in the last one year traded as high as Rmb60.60 in October 2007 and as low as Rmb9.19 in August 2008. Based on the Friday’s trading closing price the company has a market cap of Rmb132.68 billion.

Gainers & Losers

Hong Kong stocks fell led by technology companies after personal computer maker Dell’s fiscal second quarter profit slumped 17% to $616 million, while gross margin was down to 17.2% from 20% in the comparable period a year ago.

Lenovo Group fell 6.4%, LG Electronics slid 9.6% and Hon Hai shed 6.9%.

China Mobile lost 2.3% as investors continue to be cautious of the performance of the company in the post restructure period.

Exporter Esprit Holdings dropped 6% dragged by news that retail sales in Germany rose by a mere 0.6% in July from a 3.5% increase in June.

Foxconn International Holdings, a subsidiary of Hon Hai, fell 4.6% on lower profit from its parent company.

Also Air China tumbled 6.4% on rising oil prices as all offshore oil plants of the Gulf of Mexico were shut in the wake of the approaching Hurricane Gustav.

Equally oil refiner Sinopec Corp edged down 2.9%.

Coal stocks declined on worries of further government price caps on thermal coal. China Shenhua dipped 2.4% to HK$26.35 and Yanzhou Coal lost 5%.

Harbin Power plunged 8.7% after Deutsche Bank downgraded the stock to “hold” from “buy”. China Life slipped 2%.