HK Stocks Rise, China Eases Lending

123jump.com Staff
03 Nov, 2008
New York City

Hong Kong stocks surged 2.7% after Peoples Bank of China spokesperson said that banks are no longer constrained by monthly loan quotas. The relaxed lending environment is expected to provide liquidity to small and medium businesses. China Unicom fell 7% on the merger worries with China Netcom.

[R]6:00AM New York, 6:00PM Hong Kong – Stocks rose after comments from the People’s Bank of China indicated relaxed lending environment.[/R]

Hong Kong market indices rallied after Beijing eased lending conditions in order to stimulate economic growth.

Financial and realty stocks rose and energy stocks also increased as oil prices gained $1 to $69 per barrel.

In Hong Kong trading Hang Seng Index gained 2.7% or 375.70 to 14,344.37, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, increased 3% or 195.18 to 6,806.33. In Shanghai trading CSI 300 Index fell 0.6% or 10.12 to 1,653.54.

Daily turnover on main-board was HK$52.1 billion compared with HK$58.5 billion on Friday last week.

China Eases Lending Restrictions

Xinhua News Agency reported on Friday last week that People''s Bank of China spokeswoman Li Chao said China has relaxed lending restrictions in order to spur economic growth and forestall the adverse effects of the global financial turmoil.

Li added that the central bank is no longer imposing strict limits on bank lending.

Last week former deputy governor of the central bank Wu Xiaolin said the apex bank has stopped checking loans to small firms under lending quotas enforced this year, and may remove quarterly quotas for all lending in 2009.

Consumer Confidence Index Drops 0.3 points in September

The National Bureau of Statistics reported last week that China''s consumer confidence index (CCI) declined 0.3 points to 93.4 in September.

Also the macro-economy early warning index fell 2.7 points in August to 105.3 points in September.

Of the components in the early warning index, industrial production, fixed assets investment, import and export volume, profit of industrial enterprises, various loans of financial institutions, M2 and urban residents consumption was in the stable “green light zone” in the review period.

However consumer retail sales and disposable income of urban residents were in the slightly heated “yellow light zone” and fiscal revenue was in the “slightly-frigid blue light zone”.

Gainers & Losers

HSBC rose 0.5% despite a lowered rating from Goldman Sachs to “neutral” from “buy” and cut its price target to HK$102 from HK$150. China Construction Bank edged up 2.7% and China Merchants Bank jumped 3.3%.

China Unicom declined 6.7% on the speculation that its merger with China Netcom will adversely affect business with competition and slowing economic growth.

CNOOC increased 4.9% and PetroChina increased 4.4% after oil prices gained.

Realty stocks rose on news that the central bank will ease its lending conditions. China Overseas Land Investment increased 5.5% and Guangazhou R&F Properties gained 5.6%.

Walker Group declined 28.9% after announcing last week that the company''s profits might be lower than forecasted on Sichuan earthquake.

Trading in CITIC Pacific remained suspended today.

CITIC Resources surged 19.3%.

Hutchison Telecommunications International Ltd jumped 3.8% after the company said its board was meeting on November 12 to consider payment of a dividend.

Johnson Electric fell 12.5% after reporting that it expects second half profit to fall on weaknesses in the automotive sector.