China Cuts Rates, Hong Kong Stocks Rise

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

China cut its key lending and deposit rate to stimulate economic activities. Exports from China are expected to decline faster than previously estimated and real estate prices in mainland have plunged more than 25%. China cuts its key lending rate to 5.58%. Chinalco raised its stake in Rio Tinto.

[R]6:00AM New York, 6:00PM Hong Kong - China cuts key lending rate to
5.58%. The latest cut in rates is expected to provide additional funds to businesses and encourage business spending. However, investors remain cautious and fearful that U.S. recession is likely to be longer and deeper than anticipated.[/R]

In Hong Kong trading Hang Seng Index increased 3.8% or 490.85 to 13,369.45, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, soared 4.2% or 276.11 to 6,934.11. In Shanghai trading CSI 300 Index advanced 0.5% or 9.20 to 1, 843.50.

Daily turnover on main-board declined to HK$41.7 billion from HK$41.2 billion yesterday.

China Cuts Lending Rate to 5.58%

The Peoples'' Bank of China reported today that the key one year lending rate and the deposit rate was cut to 5.58% and 2.52% respectively to stimulate domestic economic activity.

Monetary authorities also lowered the cash reserve requirement of biggest banks to 16% from 17% and for smaller banks to 14% from 16% effective December 5.

World Bank yesterday forecasted that the country''s economy will slow to 7.5% next year from 9.4% in 2008. Exports are also projected to fall 3.5% in 2009 after falling 11% in 2008.

Hong Kong Existing Home Sales Rise to 44

Bloomberg News reported Centaline Property Agency reported that number of transactions at 10 of Hong Kong''s biggest private apartment project increased to 44 for the week ended November 23 from 39 a week earlier.

Home prices have declined 22.4% from the peak in March.

The report notes that transactions of apartments priced at less than HK$2 million increased to 58.4% in the first 20 days of November. The ratio was 55.3% in October.

Hong Kong Staff Turnover Fall 4.23% in Q3

Xinhua News Agency reported that the Hong Kong Institute of Human Resource Management said overall staff turnover in Hong Kong fell by 0.13 percentage points from the second quarter to 4.23% in three months to September.

Overall average job vacancy rate declined 0.13% from the three months to July to 3.77% in the third quarter.

For new positions, the percentage of the net growth fell 0.38 percentage points down from the previous quarter to 0.15%, while manufacturing sectors recorded a negative growth of -1.88%.

Gainers & Losers

Hong Kong stocks gained on a rise in commodity stocks and exporters after the U.S. committed additional $800 billion to unfreeze asset backed debt market. BHP Billiton dropped its hostile bid for rival Rio Tinto.

Retailer Li & Fung climbed 7.7%, HSBC Holdings jumped 5.9% and Standard Chartered surged 10.5%.

Mainland financial stocks increased as the Peoples'' Bank of China cut its lending rate and deposit rate to 5.58% and 2.52% correspondingly. China Construction Bank rose 4.3% and ICBC increased 2.7%.

Realty R&F Guangzhou advanced 10.5%.

Chinalco also announced that it intends to increase its stake in Rio from 12% to 14.99%. Aluminum Corp of China gained 8.5%.

Steel stocks also gained on the news. Angang Steel increased 13.3% and Baoshan Iron & Steel soared 3.9%.

Wharf Holdings climbed 12.9% after Goldman Sachs added the stock to its “conviction buy list” citing cheap valuations.

Sun Hung Kai Properties also spiked 8.6% after Morgan Stanley upgraded it to “equal weight” from “underweight.”

Sino Land increased 8.2% after a brokerage upgraded the stock to “overweight” from “equal weight.”