Banks, Realty Stocks Rise in China

Darlington Musarurwa
27 Nov, 2008
New York City

After a surprise rate cut in China stocks gained in Shanghai and in Hong Kong. Social investment in China is likely to increase to Rmb18 trillion in 2009. Airlines in China gained on the financial suppor from the government. Chinese steelmakers gained after BHP Billiton withdrew its offer for Rio.

[R]6:00AM New York, 6:00PM Hong Kong – After a surprise and large rate cut in China stocks gained in Shanghai and in Hong Kong. China’s social investment is likely to increase to Rmb18 trillion in 2009.[/R]

In Hong Kong trading Hang Seng Index rose 1.4% or 182.61 to 13,552.06, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, jumped 2.7% or 186.72 to 7,120.83. In Shanghai trading CSI 300 Index climbed 1.5% or 26.98 to 1,870.47.

Daily turnover on main board increased to HK$50.2 billion compared with HK$41.7 billion yesterday.

China’s Social Investment to Rise

National and Development Reform Committee head Zhang Ping reported today that the country’s total social investment is forecasted to reach Rmb18 trillion in 2009.

According to Zhang, the central stimulus package is divided into seven parts, with Rmb1.8 trillion for large-scale infrastructure projects such as railways, roads, airports and the national grid.

Sichuan Province which recently suffered a devastating earthquake will receive over one trillion yen, while the remainder of the stimulus package will be spent on affordable housing project, rural welfare and infrastructure construction, medical and cultural development, environmental protection and industrial restructuring.

“The Rmb4 trillion stimulus package is only part of the whole picture. China''s total social investment exceeded Rmb13 trillion in 2007 and is expected to be Rmb16 trillion this year,” said NDRC head Zhang Ping.

BHP Billiton Offer for Rio Lapses

BHP Billiton reported today that it will be withdrawing its official competition filing from the European Commission and its Registration Statement on Form F-4 from the United States Securities and Exchange Commission.

U.K. Takeover Panel Executive also noted in a statement that the U.K. offer period for Rio Tinto and BHP stopped with immediate effect.

Gainers & Losers

Hong Kong stocks rebounded after 1.08 percentage point interest rate cut by the People’s Bank of China. Realty and commodity stocks led the gainers.

China Overseas Land Investment soared 7.5%, Guangzhou R&F Properties gained 12.2% and China Resources land advanced 5.3%.

Financial stocks rallied after the central bank cut the reserve requirement by 1 percentage point. ICBC jumped 1.6%.

Commodity stocks increased as BHP Billiton withdrew its official competition filing from the European Commission and regulatory filings in the U.S. The collapsed bid eliminated concerns of a huge Australian monopoly in the iron ore market.

Angang Steel climbed 7.3% and China Shenhua Energy rose 5.3%.

Energy stocks gained on news that detail of Beijing’s fuel price reforms will be publicized soon. Sinopec Corp. increased 3.7% and PetroChina edged up 4.2%.

AirChina gained 9.4% on news that it will receive support from the Chinese government and shares of China Eastern Airlines were suspended after the company reported Rmb1.83 billion hedging loss at the end of October.

China Southern Airlines received Rmb3 billion from the government to strengthen its capital.