China Offers One More Stimulus

123jump.com Staff
03 Feb, 2009
New York City

China offered yet another stimulus package this time focused on low income housing, healthcare and education sectors. Trade between Hong Kong and Mainland China rises by 3.3%. Property stocks declined as more home loans fall in negative equity status in Hong Kong.

[R]6:00AM New York, 6:00PM Hong Kong - China launches Rmb130 stimulus plan.[/R]

Hong Kong stocks fell fractionally on news that house prices may deteriorate further. Corporate earnings have been mixed so far and investors remain focused on the health of banks in China.

In Hong Kong trading Hang Seng Index fell 0.6% or 84.60 to 12,766.89, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, gained 0.7% or 48.12 to 6,960.11. In Shanghai trading CSI 300 increased 2.5% or 51.85 to 2,108.91.

Daily turnover on main-board edged lower to HK$35.3 billion from HK$35.7 billion yesterday.

China Launches Rmb130 billion Stimulus Plan

Xinhua News Agency reported today that an official with the National Development and Reform Commission reported today that Beijing will launch a new stimulus plan worth Rmb130 billion in order to support economic growth.

In the fourth quarter ending December, central government allocated Rmb100 billion to support the economy.

According to the report, Rmb28 billion will be earmarked to provide housing for low income earners and Rmb31.5 billion will be for public facilities such as electricity, water and road construction in rural areas.

Rmb17 billion will be for health and education sector; Rmb11 billion for environmental protection; Rmb15 billion for economic restructuring; and Rmb27.5 billion for big infrastructure projects.

Rmb10 billion- of the Rmb100 billion unveiled earlier- will be spent on housing projects for low-income families; Rmb34 billion on rural infrastructure projects; Rmb25 billion on large infrastructure projects such as railways, roads and airports; Rmb13 billion on grassroots health, education and cultural projects; Rmb12 billion on energy conservation and environment protection projects; and Rmb6 billion on innovation and industrial restructuring.

Trade between Hong Kong and China mainland Rises 3.3%

Hong Kong reported today that trade volume between Chinese mainland and Hong Kong increased 3.3% to $203.67 billion from a year earlier.

Exports from mainland China to Hong Kong increased 3.4% to $190.74 billion, while shipments from Hong Kong to mainland edged up 0.9% to $12.92 billion.

Hong Kong funded projects authorized by the Chinese mainland declined 20.7% to 12,857 in 2008.

Gainers & Losers

Hong Kong shares fell 0.7% on fears that home prices will decline further as the global economic recession deepens.

PCCW increased 7.8% to HK$4.17 after the company denied allegations of improper share transfers. Shareholder activist David Webb yesterday reported to regulators he had received anonymous e-mail alleging the company was offering shares to insurance agents in a bid to canvass support for a buyout offer by PCCW''s controlling shareholders.

Bank of East Asia climbed 3.3% after reporting that Guoco Group had shored its stake in the lender in late January to 5.02% from 4.97% to become the second largest shareholder in the company.

Realty stocks declined on reports that the number of home loans in negative equity had increases three-fold, Sun Hung Kai Properties lost 4.9% to HK$64.65 and Swire Pacific plunged 4.3% to HK$45.95.

China Overseas Land slid 4.6% and Guangzhou R&F Properties plummeted 3.1%.

Li & Fung declined 4.9% on slowing consumer spending in the U.S.