HK Property, Financials Rise; Shanghai Up

123jump.com Staff
14 Oct, 2008
New York City

Stocks in Hong Kong rose for the second day after the U.S. prepared to inject $250 billion in nine largest banks. The capital injection lifted the sentiment in the region and in Shanghai and Hong Kong. property and financial stocks led the gainers.

[R]6:00AM New York, 6:00PM Hong Kong – The stocks in Hong Kong rise on the hope that the U.S. plan to take stakes in banks will improve credit market conditions.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index rose 3.19% or 520.72 to 16,832.88, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, jumped 4.35% or 352.03 to 8,435.46. In Shanghai trading CSI 300 Index slipped 2.56% or 50.87 to 1,934.62.

U.S. Invests $250 billion in Nine Banks

Secretary Henry Paulson is expected to announce a plan to invest $250 billion immediately in nine largest banks and financial companies but did not name them. The investment will be exchanged for preferred stocks, curtail executive pay and also take warrants that will convert to common stocks.

The move is designed to restore confidence in the banking system and not force the government to choose one over the other. Treasury also expects to invest additional $250 billion in another 1,000 banks.

Sources in U.S. Treasury and FDIC confirm that nine institutions that have agreed to take capital after pressured by Treasury Secretary include Bank of America, Merrill Lynch, Morgan Stanley, JP Morgan Chase, Bank of New York, State Street Corp, Wells Fargo, Goldman Sachs and Citigroup.

Gainers & Losers

Stocks in Hong Kong extended gains as investor confidence was further buoyed by plans by the U.S. Treasury to buy stakes in nine banks.

Sentiment was also strengthened by speculation that the country’s sovereign wealth fund will buy more shares in the country’s big lenders in order to stabilize the market.

Financial stocks rose. ICBC soared 3.6%, China Construction Bank soared 3.6%, Bank of China advanced 3.2% and Bank of Communications edged up 5.1%.

Insurers gained. China Life jumped 1.9% after Citigroup upgraded the stock to “buy” from “hold”.

Property stocks gained on rising expectations that Beijing will further ease its monetary policy. China Overseas Land Investment rose 12.9% and Guangzhou R&F Properties increased 16%.

Honda Motor JV partner Denway Motors spiked 19.8% to HK$2.06 after Citigroup upgraded the stock to “buy” from “sell”.