Weak Earnings Drag HK, Shanghai Stocks

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

Stocks in Hong Kong fell 2.5% and in Shanghai dropped 2% on weak bank earnings. Energy stocks fell after crude oil declined below $65 a barrel. Bank of Communications dropped 5.4% after it reported 22% in third quarter. China Unicom fell 4% after earnings declined 13%.

[R]6:00AM New York, 6:00PM Hong Kong - Weak earnings outlook and a drop in growth in earnings drag Hong Kong stocks. Bank of Communications profit rises 21.7% to Rmb7.21 billion.[/R]

Stocks in Hong Kong fell as investors locked in profits after yesterday''s rally and on a sell-off sparked by lower-than-forecasted earnings from Bank of Communications.

Energy stocks also plummeted as crude oil prices fell below $65 per barrel.

In Hong Kong trading Hang Seng Index declined 2.5% or 361.18 to 13,968.67, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, fell 2.3% or 152.89 to 6,611.15. In Shanghai trading CSI 300 Index dropped 2% or 34 to 1,163.66.

Daily turnover on main-board turnover was HK$58.47 billion from HK$75.1 billion yesterday.

China''s House Prices to Fall 10%

China''s Daily Online reported today that the Institute of International Finance of the Bank of China reported that a recently released research showed that China''s house prices are projected to drop 10% in the next two years.

Domestic real estate market is forecasted to shift from the current stagflation to a decline.

However the market is expected to rebound in 2010.

The report noted that the shrinking credit will lower the demand and prices of homes in China.

Gainers & Losers

Hong Kong stocks fell as recession worries and negative earnings forecasts unnerved investors.

Bank of Communications dropped 5.4% after reporting today 21.7% rise in third quarter profit to Rmb7.21 billion on strong loan demand and high fee income. However growth fell markedly from the surge of 81% in the first half of the year.

Financial stocks declined. HSBC plunged 3.6% to HK$92.00 and China Life fell 4.5% to HK$20.35.

Retailer Li & Fung fell 13.1% after rising 20% yesterday.

PetroChina dropped 3.4% after crude oil prices declined to below $65 per barrel.

Property companies rose after China cut its key rate by 0.27 basis points yesterday. China Overseas Land rose 6%, Country Garden increased 4.7% and Agile Property soared 5.1%.

Huadian Power International dipped 6 % after the company said it forecasts a loss in 2008 on rising coal prices.

China Unicom Ltd fell 4.4% after the company''s third quarter profit declined 13% as mobile usage dropped and subscriber growth plummeted.