Earnings Worries Grip Hong Kong

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

Stocks in Hong Kong traded with a negative bias on the earnings worries and continued malaise in U.S. and UK financial system. China Railways, Sinopec and Chalco estimated sharp declines in profit in the latest quarter. Hong Kong also cut aviation fuel surcharge by 44%.

[R]6:00AM New York, 6:00PM- HK cuts fuel surcharges by 44%. China’s investment in 3G to increase to Rmb120 billion.[/R]

Hong Kong shares declined after a spate of corporate earnings downgrades as the continued global financial turmoil.

In Hong Kong trading Hang Seng Index fell 0.6% or 79.39 to 12,578.50, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, declined 1.5% or 98.84 to 6,661.93. In Shanghai trading CSI 300 Index slipped 0.6% or 11.87 to 2,032.68.

Daily turnover on main-board declined to HK$33.7 billion from HK$35.4 billion yesterday.

HK Cuts Fuel Surcharges by 44%

Xinhua News Agency reported today that the Civil Aviation Department announced yesterday that it has allowed four airlines to slash fuel surcharges by 44% for two months from February 1, as global fuel prices continue to plummet.

New maximum fuel surcharge will be adjusted to HK$61 for short-haul flights and HK$280 for long-haul flights.

The department said in the latest applications for levying fuel surcharges the department considered aviation fuel prices, the justifications provided by the airlines, and the charges levied by other airlines.

China’s Investment in 3G Communication Standard to Soar

China’s Ministry of Industry and Information Technology reported yesterday that cumulative investment in 3G construction is expected to top Rmb170 billion, with an investment of Rmb120 billion already initiated.

3G network construction plans of the three telecom enterprises, estimate that investment in 3G construction over the next three years is expected to be about Rmb400 billion and will more or less cover all prefecture-level cities.

Exchange Fund to Support HK Dollar Exchange Value

Xinhua News Agency reported today that Hong Kong Monetary Authority chief executive officer Joseph Yam said the Exchange Fund is capable of supporting the Hong Kong dollar exchange value and ensure stability.

Yam said growth in the Exchange Fund''s size reflected the fact that the amount of money available for maintaining monetary and financial stability in Hong Kong has gained despite the financial crisis.

Gainers & Losers

HSBC gained 0.8% on the news that global intervention will support a global economic recovery.

Sinopec fell 1.7% after forecasting that annual profit will probably drop 50% due to refining losses as a result of strict controls over refined oil prices in China.

Aluminum Corp of China Ltd declined 3% after it cautioned yesterday that profit will decline by more than 50% on falling demand and high production costs.

China Unicom slipped 0.9% to HK$6.84. China Railway Group Ltd declined 0.2% after saying profit may drop 50%.

Fosun International plunged 8.1% and Brilliance Auto, parent of Brilliance China Automotive Holdings , shed 2.1% after announcing that it is investing Rmb3 billion yuan in a new plant in northeast China.

Yanzhou Coal Mining Co plummeted 5.8% after it cut its 2008 net profit growth forecast.

Sinopec Forecasts Profit to Drop 50% in 2008

Sinopec estimated profit to decline of more than 50% in 2008 after local refiners cut output and the government capped prices of petroleum products.

The company also reported that it processed 4.5% more crude oil in 2008 at 168.8 million tons, while its crude oil output increased 1.8% to 296.8 million barrels.

Gasoline output rose 12% to 29.09 million tons, with diesel production increasing 10% to 68.78 million tons.

Natural gas production advanced 3.7% to 293 billion cubic meters and Synthetic rubber and urea output increased 4.3% and 5.37% in that order.

In addition, domestic sales of refined productions rallied 3% to 123million tons.