China Fiscal Deficit Surges 20%

Darlington Musarurwa
02 Feb, 2009
New York City

Stocks in Hong Kong fell 3.1% after a week-long closure. Investors are increasingly concerned that stimulus package from the goverment may be not enough and come too late to prevent the economy from shrinking further. Stocks in Shanghai rose. Fiscal deficit in China rose 20% in 2008.

[R]6:00AM New York, 6:00PM Hong Kong - China fiscal deficit increases 19.5% to Rmb6.13 trillion. China mainland tourists spend $25.5 in Taiwan.[R]

The benchmark stock index slid 3.1% after Beijing failed to unveil the much anticipated stimulus package at the weekend. Financial stocks dropped.

In Hong Kong Hang Seng Index fell 3.1% or 416.72 to 12,861.49, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, slipped 3.1% or 219.99 to 6,911.99. In Shanghai trading CSI 300 Index rose 1.2% or 24.38 to 2,057.06.

Daily turnover on main-board declined HK$35.7 billion from HK$44.1 billion on Friday last week.

China’s Fiscal Deficit Rises 19.5% to Rmb6.13 trillion

China’s Ministry of Finance reported today on its Web site the country’s preliminary fiscal deficit increased 19.5% to Rmb6.13 trillion in 2008 from a year ago. The government blamed the additional spending on earth quake relief measures.

Fiscal spending last year gained 25.4% to Rmb6.24 trillion, as the actual spending increased 22.6% than planned in the budget fixed at the beginning of 2008.

China Announces Measures to Promote Service Outsourcing

Xinhua News Agency reported today that that the State Council has approved a draft document compiled by the Ministry of Commerce to boost the development of service outsourcing.

About 20 cities such as Beijing, Shanghai, Xi''an, Suzhou and Hangzhou, have been identified as pilot service outsourcing regions, where companies are eligible for favorable polices. Beijing will announce a series of tax and fiscal policies and intellectual property rights protection measures.

The government will offer service outsourcing companies a subsidy of up to Rmb 4,500 a year for every college graduate employed on a contract of at least one year.

Gainers & Losers

Hong Kong shares dipped 3.1% after China failed to unveil a new set of stimulus measures that was anticipated by the marker, especially after the week-long Lunar New Year holidays.

HSBC fell 3.8% to HK$58.50 on the on going worries that the lender will need additional capital.

Other financial stocks declined. Bank of Communications fell 4.4% and Ping An Insurance tumbled 4.8%.

Hong Kong Exchanges & Clearing shed 3.6% to HK$65.55. Li & Fung slipped 3.8% after the U.S. economy fell the most in 27 years.

Gold stocks increased as gold prices jumped $21 to $921 per ounce on weaknesses in the equity markets.

Mengniu Dairy advanced 1.5% to HK$10.56 after Goldman Sachs upgraded its stock to “buy” from “neutral” as milk demand has rebounded from its lows.