Air China Plunges 10%, Shanghai Down 4%

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

Hong Kong stocks edged higher after the U.S. announced yet another bailout plan for Citigroup. However, stocks in Shanghai dropped 4.3% as small businesses suffer from tight lending conditions. Trading volume and in both exchanges dropped. Air China plunged 10% on $454 million of fuel losses.

[R]6:00AM New York, 6:00PM Hong Kong – Tight lending conditions has driven nearly 67,000 small businesses to closure.[/R]

In [Hong Kong trading the Hang Seng Index fell 1.6% or 201.26 to 12,457.94, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, slid 0.8% or 48.01 to 6,376.96. In Shanghai trading CSI 300 Index shed 4.3% or 83.09 to 1,837.64.

Daily turnover on main-board plummeted to HK$35 billion, below the average trading of HK$44 billion.

Small Company Assistance Fund Launched

Xinhua News Agency reported today that China Association of Small and Medium Enterprises (CASME) will roll out Rmb3 billion venture investment fund to help small and medium enterprises to raise capital. The fund will be established by the end of this year.

The CASME is also considering an SME corporate bond with the northeastern Liaoning provincial government and the founding of a bank with a planned registered capital of Rmb10 billion.

Industrial companies with sales revenue of Rmb300 million will be eligible for assistance from the fund and the bank.

According to the National Development and Reform Committee, 67,000 small and medium sized companies with sales income exceeding Rmb5 million closed in the first half of 2008 on a tight monetary policy and deteriorating global financial conditions.

U.S. Guarantees Citigroup''s $300 billion Assets

The Federal Reserve Bank, the U.S. Treasury and the Federal Deposit Insurance Corporation jointly announced yesterday that the government will guarantee Citigroup''s troubled assets, loans and securities that are backed by residential and commercial real estate valued at $306 billion.

Government will also invest $20 billion in the lender from the Troubled Asset Relief Program in return for preferred shares and an 8% dividend.

Under the plan, Citigroup''s executive will implement enhanced executive compensation restrictions and the Federal Deposit Insurance Corp. mortgage modification program.

China Forecasted to Grow 8.6% in 2009

China Galaxy Research reported on Saturday that the country''s economy is forecasted to rise 8.6% in 2009, noting that slowing economic growth will make it increasingly difficult for higher earnings growth.

The report noted that China''s shares are no longer expensive considering the economic growth rate.

Gainers & Losers


HSBC Holdings rose 3% to HK$74.75, but Hang Seng Bank dropped 2.4% and BOC Hong declined 7%.

Standard Chartered dropped 6.3% but were later suspended after the lender announced $2.69 billion rights issue to strengthen its balance sheet.

Gold miner Zijin Mining climbed 3.1% after near month delivery for the metal increased $43.10 to $798.1 per ounce and CNOOC rose 2%.

Air China shed 10.2% after reporting on Saturday it forecasts losses its fuel hedging contracts had soared to $454 million from the third quarter.

China Southern Airlines also plunged 13.6% and China Eastern plunged 15.1%.