Hong Kong Plunges 7%, Cathay Pacific Warns

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

Stocks in Hong Kong dropped 7% and in Shanghai declined 2.5% after higher than expected private sector job losses in the U.S. Japan and other markets in Asia fell as well. Cathay Pacific warned that fuel hedging contract will cost the company $360 million.

[R]6:00AM New York, 6:00PM Hong Kong - Hong Kong stocks drop 7% and Shanghai stocks decline after the U.S. job reports. Cathay Pacific reported losses from fuel hedging contract.[/R]

In Hong Kong trading the Hang Seng Index dropped 7.1% or 1,050.12 to 13,790.04, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, declined 8.7% or 626.19 to 6,599.50. In Shanghai trading CSI 300 Index shed 2.5% or 41.64 to 1,649.78.

Daily turnover on main board was HK$48.3 billion compared with HK$63.4 yesterday.

Cathay Pacific issues Profit Warning

Cathay Pacific reported today that its 2008 annual profits will be less-than-forecasted as the airline’s fuel hedging contracts that run to 2011 will reduce the estimated earnings by HK$2.8 billion.

Total fuel cost for the year is expected to be HK$40 billion. Revenue is expected to be lower on a rise in the U.S. dollar.

U.S. Private Employers Cut 157,000 Jobs in October

The U.S. based ADP Employer Services reported yesterday that U.S private employers cut 157,000 jobs in October and revised jobs lost in September to 26,000 from the initial loss of 8,000. Analysts had earlier projected a cut of 100,000 private sector jobs in October.

The Institute for Supply Management also said service industries index in the U.S. eased to 44.4 from the projected 47.

Gainers & Losers

Energy stocks declined after crude oil prices for December delivery fell 7.4% to $63.30 per barrel. CNOOC plunged 13% after Credit Suisse cut the company to “neutral” from “outperform”.

PetroChina shed 7.8% and Sinopec Corp. dropped 9.6% after Credit Suisse lowered its crude oil price estimate to $60 per barrel for next year as it forecasts that demand will shed in the first six months of 2009.

Cathay Pacific slid 14.3% after the company''s profit plummeted on $360 million in fuel hedging losses.

Dah Sing Banking Corp. shed 8.4 % after it cautioned that its second half profit will be affected by the global financial turmoil. The holding company Dah Sing Financial Holdings plunged 18.7%.

The Industrial and Commercial Bank of China (ICBC) fell 8.4%, HSBC lost 4.5% and China Overseas Land Investment climbed down 8.7 %.

Guangzhou R&F Properties plunged 7.8%.

Commodity stocks declined on falling demand from China. China Shenhua Energy dipped 12.2% and China Coal Energy climbed down 14.7%.

Shares in China Molybdenum slipped 9.8% after Morgan Stanley downgraded the stock to “equal-weight” from “overweight”.

Shipping lines fell. Cosco Pacific tumbled 15.7% after Goldman Sachs cut its 2009 earnings per share estimate by 35% and for 2010 by 52%.

China Shipping Development plunged 16%.

Richard Li and China Unicom Offers HK$ 1.9 billion for PCCW

China Daily Online reported yesterday that Singapore-listed company Pacific Century Regional Development Ltd (PCRD) and China Network Communications Group, owned by China Unicom, will offer HK$4.20 a share to purchase 52% in PCCW.

The price represents a 53% premium of the telecommunication company''s closing price on October 14, when the shares were suspended from trading.

Under the proposal, PCRD will pay HK$11.1 billion or 74% for the firm while China Netcom will pay the remaining HK$3.8 billion.