China Foreign Trade Rises 18%; Sanlu Bankrupt

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

The troubled Chinese dairy, Sanlu Group was declared bankrupt by Hebei provincial court after it was closed in September for selling tainted milk formula. Hong Kong visitors in November declined 1.1% and weakness in tourism sector is likely to continue in 2009. China foreign trade gains 18% in 2008.

[R]6:00AM New York, 6:00PM Hong Kong – Sanlu Group, the closed dairy was declared bankrupt by China province. Hong Kong visitors decline. China international trade is expected to rise 18% to $2.5 trillion in the year.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index fell 0.3% or 36.65 to 14,184.14, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, dropped 0.5% or 34.85 to 7,685.17. In Shanghai trading CSI 300 Index dipped 1.7% or 31.88 to 1,887.08.

Daily turnover on main-board plunged to HK$18.3 billion compared with HK$17.5 billion by mid-day on Tuesday.

HK Visitors Falls 1.1% to 2.42 million in November

Hong Kong Tourism Board reported today that visitor arrivals declined 1.1% to 2.42 million in November.

Cumulative arrivals in the January to November period increased 5.3% to 26.7 million from the comparable period a year ago.

Visitors from mainland China rose 5.6% to 1.36 million, but from South and East Asia dropped 3.6%, Taiwan 5% and Australia, New Zealand and other South Pacific countries 4.8%.

Visitors from North Asia, Europe and the Middle East and the Americas fell 14%, 10.9% and 16.9% respectively.

Of the visitors in November, 749,303 were on individual travelers, up 11.8% from last year.

Hotel occupancy across all categories of hotels declined five percentage points to 88% in November and average hotel room rate across all categories eased 11.2% from a year ago to HK$1,228.

China’s Foreign Trade Surges 18%

China’s Minister of Commerce Chen Deming said yesterday the country’s import and exports are expected to soar 18% from last year to US$2.5 trillion in 2008 leveraged by tech-intensive shipments and service trade. Service trade is expected to exceed $300 billion in the period.

Exports from China have decelerated sharply and declined in November for the first time in seven years. In summer, China for the first time instituted minimum wage and encouraged several labor intensive industries to relocate from coastal regions to hinterland.

Gainers & Losers

Hong Kong stocks fell 0.3% on profit taking ahead of holiday period. The stock market closed at mid-day and will remain closed until December 29.

Airlines rose after crude oil prices slipped $0.93 to $39 per barrel. Cathay Pacific rose 4%, Air China climbed 1.3%, China Southern Airlines soared 3.8% and China Eastern Airlines jumped 11.2%.

Financial stocks increased. Hang Seng Bank gained 3.5% and Bank of East Asia edged up 1.2%.

Property rose on bargain hunting. Cheung Kong Holdings jumped 2.5% and Sino Land soared 5.4%.

China Mobile fell 1.3%.

Sinopec Shanghai Petrochemical Co Ltd fell 6.5% after the company reported that it expects fourth quarter loss will be larger than the third quarter.

Mengniu Dairy rose 4.3% after the company warned of a loss of $131 million in 2008 as the tainted dairy product scandal in China negatively impacted on sales.

Sanlu Group Declared Bankrupt

Sanlu Group Company was declared bankrupt by a court in Hebei province in northeast China. The dairy company was closed in September after it and others sold tainted milk and contaminated infant formula. The Chinese company had 43% investment from New Zealand based Fonterra which has written off NZ$200 million investment in the closed company.

China destroyed several thousand tons of milk and nearly 30% of dairy producers were closed after China conducted tests for melamine and found contamination that hospitalized 54,000 people.