China Foreign Trade Decline Accelerates

123jump.com Staff
11 Dec, 2008
New York City

China foreign trade rises in the first eleven months 29% from a year ago but faced a sharp deceleration in November. The latest data showed exports in the month declined 2.2%, first decline since June 2001. Imports declined at a faster pace indicating slowdown in domestic economy.

[R]6:00AM New York, 6:00PM Hong Kong - China’s foreign trade volume rise 29% to US$2.4 trillion in 11 months to November.[/R]

In Hong Kong trading Hang Seng Index rose 0.2% to 36.16 to 15,613.90, and China Enterprises of Hong Kong listed mainland shares, or H shares, fell 0.3% or 21.04 to 8,486.45. In Shanghai trading CSI 300 fell 2.4% or 50.06 to 2,046.34.

Daily turnover on main-board rose at HK$61.4 billion from HK$61.9 billion yesterday.

International Trade Falters in China

China''s customs statistics indicate that total foreign trade volumes soared 21% to $2.4 trillion in the first 11 months of the year. Exports advanced 19.3% to US$1.3 trillion and imports gained 22.8% to US$1.1 trillion.

Trade surplus gained 6.9% on the year to $255.95 billion.

However, exports in November dropped 2.2% from a year ago after rising 19.2% in October and soaring more than 25% in 2007. The monthly decline in exports is the first drop since June 2001. Imports declined 17.9% in November after rising at 15.6% in October and soaring 20% in 2007.

China''s CPI Forecasted to Fall 1.2% in December

Merrill Lynch in a research note said that China''s inflation is expected to dip to 1.2% in December and may turn negative in February 2009.

China''s consumer price index dropped 2.4% annually in November. The producer price index is expected to drop further on falling demand for energy, commodities and other producer goods.

According to the report, declining inflation will give the government leverage to step up its fiscal stimulus and loosen its monetary stance.

Merrill Lynch projects that the central bank cut the benchmark one-year deposit rate by another 1.08 percentage points before mid-2009 and loan rate could be cut by 1.62 percentage points.

The reserve requirement ratio will also be slashed by another 2.5 to 3 percentage points by mid-2009.

Gainers & Losers

Hong Kong stocks rose as property stocks gained on speculation that the U.S. Federal Reserve will cut its key rate next week. The country''s monetary policy is pegged to the U.S.

Airlines also advanced despite rising fuel prices after unveiling capital raising plans. China Southern Airlines gained 43% and China Eastern Airlines soared 41% after on plans to place shares worth Rmb3 billion each as part of the government''s capital injection plan.

Li & Fung fell 5.4% on speculation that U.S. retail sales will fall.

Realty stocks gained on expectations that U.S. retail sales will drop. Hung Kai Properties rose 5.5%, Henderson Land jumped 6.6%, Cheung Kong Holdings climbed 3.7% and New World Development rallied 9.4%.

China Overseas Land fell 8.6% on the reports that it plans to sell HK$2.5 billion rights shares at a discount.

Energy stocks gained as oil prices rose 6% to $45 per barrel. China is also capitalizing on the current drop in oil prices to build oil reserves. CNOOC increased 3.1% and PetroChina edged up 2.1%.

Gold stocks also increased as gold prices held above $800 per ounce. Sino Gold rose 16% after announcing that it expects a 53% increase next year.