Hong Kong Stocks Soar 13% on Rate Cut

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

Stocks in Hong Kong soared after the HKMA lowered rates by 0.5% following the U.S. rate cut. The benchmark index Hang Seng surged 13%. Stocks in Shanghai increased 2.4%. PetroChina third quarter earnings rose 30%, however Sinopec earnings fell 39%. China Cosco surged 41% on 19% rise in earnings.

[R]6:00AM New York, 6:00PM Hong Kong - Hong Kong stocks soar 13% after HKMA cuts its base rate. Stocks in Shanghai increased 2.4%.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index increased 12.8% or 1,627.78 to 14,329.85, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, gained 16.9% or 977.33 to 6,764.04. In Shanghai trading CSI 300 Index gained 2.4% or 39.43 to 1,697.66.

Daily turnover on main-board was HK$75.1 billion from HK$66.1 billion yesterday.

Hong Kong Adjusts Base Rate to 1.5%

The Hong Kong Monetary Authority reported today that is has lowered its key rate to 1.5% from 2% in line with the slash by the U.S. Federal Reserve.

HKMA new pre-set formula pegs the base rate at 50 basis points above the prevailing U.S. target rate.

Federal Reserve yesterday lowered its key rate by 50 basis points to 1%.

The Peoples Bank of China also reported yesterday that it will slash its benchmark interest rate by 0.27% effective today.

Benchmark one-year deposit rate will fall to 3.60% from 3.87%, while the benchmark one-year lending rate will decline from 6.93% to 6.66%.

China's Current Account Surplus Soars 18%

China's State Administration of Foreign Exchange said the country's current account surplus increased 18% to US$191.7 billion in the first six months of the year. Surplus for the capital and financial account dropped 20% to US$71.9 billion.

The foreign exchange reserves increased to $1.81 trillion at the end of June.

China Allocates Rmb1 billion for SMES

The People’s Daily Online reported that China's government has allocated Rmb1 billion for credit guarantees for small to medium-sized enterprises.

Gainers & Losers

Hong Kong market averages soared spurred by a wave of interest rate cuts from the U.S. Federal Reserve, China, Taiwan and Hong Kong.

China National Building Materials jumped 85% after brokerage UBS said the company will benefit from China's rate cut. China Overseas Land Investment also increased 19.4% after the rate cut.

CNOOC gained 22.4% and PetroChina edged up 19.9% after profit in the three months to September rose 30% on high oil prices.

Financial stocks advanced. HSBC climbed 10.7%, China Construction Bank jumped 19.2%, China Merchants Bank soared 15.1% after third quarter profit rose 49.5%.

However BOC Hong Kong declined 1.3% after impairment charges on investments in mortgage-backed securities and unsecured debt topped HK$3.2 billion.

Commodity stocks also advanced on expectation demand will rise following the wave of global rate cut. China Shenhua increased 20.1% after third quarter profit gained 48%. China Coal Energy climbed 19.3% and Yanzhou Coal increased 30.1%.

China COSCO rallied 41.4 % after third quarter earnings edged up 19%.

Earnings Review

PetroChina Co reported that third quarter earnings in the July-September period rose 30% to Rmb39.89 billion. Earnings per share rose to Rmb0.22.

The cumulative oil and gas output gained 6% to 880.7 million barrels from the comparable period a year ago and 642.5 million barrels of crude oil were processed, an increase of 5.1% from last year.

Sinopec Corp. reported that third quarter earnings in the three months to September fell 39% from a year ago despite receiving Rmb11.7 billion from the government to insulate it from rising crude oil prices and price controls.

Bank of China

Bank of China said net profit rose to Rmb59.94 billion in the quarter to September. Earnings per share advanced Rmb0.06 from a year ago to Rmb0.24 per share.

In the January to September period net interest income rose 10.6% to Rmb122.25 billion.

The bank had Rmb6.2 billion of debt issued by Fannie Mae and Freddie Mac as of September 30, and Rmb3.75 billion of mortgage-backed securities guaranteed by the two lending U.S. government agencies.