HK GDP Drops 2.5%; China Stocks Fall

123jump.com Staff
20 Mar, 2009
New York City

Hong Kong GDP falls 2.5% in the fourth quarter. Stocks in Shanghai and Hong Kong closed lower after weaker than expected earnings from China Mobile and Alibaba.com Ltd. Hong Kong bankruptcies increase 120% in February. Ahead of bank earnings next weeks, investors sold financial stocks.

[R]6:00AM New York, 6:00PM Hong Kong – Hong Kong GDP falls 2.5% in the fourth quarter. Stocks in Shanghai and Hong Kong closed lower after weaker than expected earnings from China Mobile and Alibaba.com Ltd. Hong Kong bankruptcies increase 120% in February.[/R]

The benchmark stock index plummeted 2.3% on weak earnings from China Mobile and Alibaba.com Limited. Investors were also cautious ahead of results announcements by financial institutions next week.

In Hong Kong trading Hang Seng Index dropped 2.3% or 297.41 to 12,833.51, and the China Enterprises of Hong Kong listed mainland shares, or H shares, dipped 3.1% or 235.47 to 7,495.96. In Shanghai trading CSI 300 Index declined 0.1% or 2.73 to 2,379.84.

Daily turnover on main-board declined to HK$43.9 billion from HK$48.6 billion yesterday.

China to Increase Gas Prices

China Daily Online reported today that the China is set to raise gas prices within the year. Analysts forecast that the increase is not likely to affect domestic consumers. China controls natural gas market prices and currently at less than half of the international prices.

Energy professor with Xiamen Univeristy Lin Boqiang said now is the right time for China to hike natural gas prices. “I believe this round of price adjustment will not be very huge,” said Lin.

HK Bankruptcies Rise 120% in February

Hong Kong Official Receivers Office reported today that the country’s bankruptcy orders gained 120% to 1,675 in February from a month ago and surged 100% from a year ago month.

The report notes that the number of bankruptcy orders in the first two months of the year gained 37% to 2,434 from a year earlier.

Compulsory winding-up petitions increased by 8 from a month ago to 53 and winding-up orders increased by 2 from January to 31 in the period.

HK GDP Drops 2.5% in Q4

The Census & Statistics Department reported today that the country’s gross domestic product dropped 2.5% in the fourth quarter from a year ago after increasing 1.7% in the third quarter.

Net output in all the service activities taken together fell 2.1% in real terms in the period from a rise of 2% in the third quarter.

Net output in the wholesale, retail, import-export, restaurant and hotel sectors dipped 2.1% in real terms in the fourth quarter, compared with the 4.3% increase in the third quarter.

According to the report, net output for 2008 advanced 4.1% in real terms compared with 6.6% in 2007.

In addition, net output in the transport, storage and communications sector shed 4.2% in real terms in the fourth quarter, compared with the increase of 2% in the previous quarter.

Gainers & Losers

Hong Kong stocks shed 2.3% on broker downgrades on negative corporate earnings by Chinese firms.

Financial stock tumbled before announcing their results in the final week of March. China Construction Bank dropped 5.2% and ICBC tumbled 5.4%.

China Mobile fell 5.4% to HK$63.10 after the company’s quarterly profit shrank the most in four years.

Alibaba plunged 12.4% to HK$7.18 after fourth quarter profit tumbled.

Esprit Holdings increased 4.1% to HK$46 after brokerage Merrill Lynch raised its rating to “buy” and set its target price at HK$60.6.

Energy prices soared as crude oil prices jumped 7.2% to $51.60 per barrel after the U.S. Federal Reserve announced plans of shoring up the financial market by buying Treasuries. CNOOC jumped 1.2%.

Zijin Mining advanced 16.4% to HK$5.88 after gold prices rallied 7.8% to $958 per ounce.