Shippers Soar, Banks Surge in China

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

Hong Kong, Shanghai in record one day gains. Investors stampeded after Beijing eliminated trading tax and Hong Kong added liquidity to the market. Earlier, the U.S Fed and five other central banks added $247 billion in liquidity in the global credit markets. HK Monetary Authority added $1.56 billion in liquidity. Banks in China surged. ICBC, China Construction surged 16% and HSBC added 7.5%. Property stocks scaled higher. Shipping lines surged more than 25% after freight index rose.

[R]6:00AM New York, 6:00PM Hong Kong- China scraps share trading stamp tax. HK releases HK$1.556 billion into the market.[/R]

Hong Kong stock indexes rose sharply after Beijing announced that it has scrapped the share trading stamp tax.

Market Sentiment

In Hong Kong trading Hang Seng Index rallied 9.61% or 1,695.27 to 19,327.37, and the China Enterprises of Hong Kong listed mainland shares, or H shares, surged 15.53% or 1,340.94 to 9,974.67. In Shanghai trading CSI 300 Index advanced 9.34% or 177.12 to 2,073.11.

Daily turnover on main-board turnover was HK$124.6 billion compared with HK$102.2 billion yesterday.

China Scraps Trading Stamp Tax

Xinhua News Agency reported on its Web site today that the Ministry of Finance and the State Administration of Taxation was given the approval by the State Council and China''s Cabinet to cancel the share trading stamp tax on stock purchase, while the stamp tax on share selling was unchanged at 0.1%

The cancellation became effective today.

Central Huijin Investment Co., Ltd., which is an investment arm of the government, said yesterday that it will buy shares of three major Chinese lenders- the Industrial and Commercial Bank of China, the Bank of China and the China Construction Bank- on the secondary market in order to strengthen their share prices in the wake of the current turmoil.

HK Releases HK$1.556 billion into the Market

The Hong Kong Monetary Authority yesterday released HK$1.556 billion into the economy in order to provide liquidity as conditions continue to deteriorate in the credit market.

As a result the one-month Hong Kong interbank offered rate declined to 3.69%.

Similarly, the U.S. Federal Reserve, the Bank of Canada, the Bank of England, the European Central Bank ECB, the Bank of Japan, and the Swiss National Bank will roll out coordinated measures designed to address the continued elevated pressures in U.S. dollar short-term funding markets. The central banks coordinated to add $188 billion of liquidity in the global credit markets.

Gainers & Losers

Stocks in Hong Kong rose as central banks around the world stepped up interventions to relieve pressure on the money market. Financial stocks gained on reports China''s sovereign wealth fund would help stabilize the stock market by buying shares in listed companies.

ICBC increased 16.2%, China Construction Bank jumped 15.7%, HSBC advanced 7.5% and Hang Seng Bank gained 5.2%.

China Life advanced 9.8% and Ping An Insurance climbed 16.9%.

Property stocks rose as well. China Overseas Land Investment gained 14.9% on news the company will have 20 projects on sale in September and October that could positively impact on sales.

Shipping lines increased after the Baltic Dry Index, which measures freight charges, rose 1.2% yesterday. China Shipping Development climbed 36.1% and China Cosco spiked 25.8%.

CNOOC rose 14.6% while China Shenhua Energy edged up 30%. Hong Kong Exchanges & Clearing surged 16%. China Mobile also increased 14.8%.