Shanghai Stocks Rebound 4%; HSBC Drops

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

Stocks in Shanghai soared 4% and in Hong Kong gained 0.3%. China revised its 2007 economic growth to 13% from 11.9% but Deutsche Bank estimated that the nation will face the sharpest economic slowdown in 10 years. China trimmed fuel prices between 2% and 3%. RBS sold its stake in Bank of China.

[R]6:00AM New York, 6:00PM Hong Kong - China to experience its sharpest deflation in 10 years in 2009, according to Deutsche Bank. China cuts fuel prices.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index gained 0.3% or 36.46 to 13,704.61, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, increased 2% or 138.51 to 7,219.04. In Shanghai trading CSI 300 index soared 4% or 79.06 to 1,955.24.

Daily turnover on main-board surged to HK$66.2 billion from HK$47.3 billion yesterday.

China Revises Growth Rate to 13% for 2007

National Bureau of Statistics reported today that it has revised the country''s gross domestic product for 2007 to 13% from 11.9%.

Separately Deutsche Bank noted that the country''s gross domestic product is expected to slow to 7% in 2009 from 9% last year as domestic investment and external demand slackens.

Economists forecast that China will be plagued by decelerating investment in the real estate, manufacturing and mining sectors this year. Deutsche Bank said China will experience its sharpest deflation in 10 years in 2009.

China to Cuts Fuel Prices

Xinhua News Agency reported today that China will slash retail gasoline and diesel prices by 2% and 3.2% correspondingly at midnight today.

The National Development and Reform Commission said benchmark gasoline prices will be reduced by Rmb140 per ton and diesel will be lowered by Rmb160 per ton.

In December benchmark gasoline and diesel prices were lowered by 14% and 18% respectively.

“There is still room for a further cut in domestic oil prices despite recent fluctuations in global prices,” said the NDRC.

Under a new pricing mechanism that came into effect on January 1, China''s domestic prices will be """"""""indirectly linked"""""""" to global crude prices """"""""in a controlled manner.""""""""

Gainers & Losers

Stocks in Hong Kong rose 0.3% as investors bought financial stocks with low valuations following last week''s sell-off on the speculation that the U.S. and European banks might sale stakes in Chinese banks in order to shore up their balance sheets.

Gains were limited after Morgan Stanley cut its price target for HSBC Holdings by 31% to HK$52 and also lowered its profit estimate by 17% for 2008 and 39% for 2009.

The investment bank expects that HSBC may need to inject between $20 billion and $30 billion and cut its dividend in half. The stock dropped 4.1% to HK$70.

Other financial stocks increased. Bank of China gained 2.7% after U.K. bank Royal Bank of Scotland unloaded $2.4 billion worth of shares at a discount.

China Construction Bank soared 3.5% on the hopes of a quick recovery from the economic turmoil and Bank of Communications increased 3.1%.

ICBC lost 1.2%.

China Life soared 2.5% and Ping An Insurance increased 4.3%.

Realty stocks advanced on expectations that Beijing will announce supportive measure for property builders who specialize in building small apartments. China Overseas Land gained 5.7% and Country Garden jumped 2.5%.