Weak Confidence In China

123jump.com Staff
09 Jan, 2009
New York City

Stocks in Hong Kong edged lower and in Shanghai rose 1.6% on Friday but fell sharply for the week. Benchmark index in Hong Kong fell 4.4% for the week. A survey of businesses suggested a weak confidence and projected that the weakness is likely to persist till 2010. Lenovo Group fell on a downgrade.

[R]6:00AM New York, 6:00PM Hong Kong - China’s business confidence is expected to remain weak until 2010.[/R]

In Hong Kong trading Hang Seng Index dropped 0.3% or 38.47 to 14,377.44, dropping 4.4% for the week, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, plunged 0.5% or 36.21 to 7,723.81. In Shanghai trading CSI 300 Index rose 1.6% or 30.37 to 1,198.32.

Daily turnover on main-board fell to HK$45.1 billion from HK$55.5 billion yesterday.

Chinese Business Confidence to Remain Weak Until 2010

U.K.-based L.E.K. Consulting said Chinese enterprises forecast the economy will remain weak until 2010 as economic conditions drop more than previously anticipated.

Interviews with over 30 business owners and executives of Chinese enterprises indicated that most respondents say the business environment is “unfavourable” or “strongly unfavourable.”

The survey also indicated that confidence is expected to fall further in the coming months.

About 56% of respondents surveyed said the negative impact of the global economic slowdown will continue for one to two years and 44% predicted that the effects will linger for even a longer period.

The report observes that sentiment has also been dampened by falling overseas demand, a rising yuan, soaring manufacturing costs including strict control on credit and financing to small-sized exporters.

An estimated 50% of the respondents said they will invest less than planned.

“As the prognosis of the global economic situation remains unclear, domestic companies typically expect pressures on their businesses to continue or even increase in the coming six months, indicating a flagging business confidence for 2009,” the report said.

Gainers & Losers

Hong Kong stocks fell in the afternoon session to end 0.3% down on profit taking ahead of key employment data from the U.S. Labor Department today.

Industrial & Commercial Bank of China dropped 1.1% after Bank of America and Li Ka-shing sold a part of their holdings in two major mainland banks.

China Mobile declined 0.9% and Foxconn International Holdings fell 15.3%.

Ping An shed 4.3% after UBS downgraded the stock to “sell” from “neutral.”

Sa Sa International climbed 11.9% to HK$2.07 after saying its retail and wholesale business rose 10.2% year-on-year in the three months to December. The company also said it added nine retail outlets to its network during the period, increasing its retail network to 152 outlets at the end of December.

Lenovo Group fell 9.4% to HK$1.73 after UBS retained its rating on the stock to “sell.”

AVIC signs Rmb176 billion Credit Agreement with Banks

Xinhua News Agency reported today that Aviation Industry Corp. of China signed Rmb176 billion credit agreement with 10 Chinese banks yesterday.

Industrial and Commercial Bank of China, China Construction Bank and China Citic Bank agreed to lend Rmb30 billion each.

Bank of Communications, Shanghai Pudong Development Bank, China Everbright Bank, China Merchants Bank, Bank of Beijing, China Minsheng Banking and Industrial Bank also contributed.

AVIC also holds more than 26% in the Commercial Aircraft Corp. of China (COMAC), manager of the country''s large aircraft program.