China Manufacturing Index Gains

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

In heavy volume, stocks in Hong Kong edged higher after surging for the four days in a row and adding 3% for the week. The banks, real estate developers and electric power utilities advanced. The rise in manufacturing index lifted sentiment in trading in China and in Hong Kong.

[R]6:00AM New York, 6:00PM Hong Kong - China’s Purchasing Managers’ Index rise 52.4% in March. HK economy forecasted to shrink 3% in 2009.[/R]

Market Sentiment

In Hong Kong trading Hang Seng Index gained 0.2% or 23.72 to 14,545.69, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, increased 0.03% or 2.53 to 8,574.73. In Shanghai trading CSI 300 index edged 0.2% or 5.90 to 2,570.50.

Daily turnover on main-board declined to HK$71.4 billion from HK$75.22 billion yesterday.

Analysts were quick in tying the latest increase in manufacturing index to the government stimulus plan of 4 trillion yuan or $580 billion.

The first sign of revival in manufacturing was widespread according to the latest read on the index. Analysts at Nomura Holdings and China International Capital Corporation were quick in lifting their annual growth estimate for the economy. Nomura revised their growth estimate to 10% and CICC lifted it to 8%.

Purchasing Managers Index Rises to 52.4% in March

China’s Federation of Logistics and Purchasing (CFLP) reported yesterday that the Purchasing Manager’s Index rose by 0.3 percentage points from a month ago to 52.4% in March, rising for the fifth consecutive month.

A measure above 50 represents expansion, while a figure below 50 shows contraction.

The CFLP noted that March indices measuring new orders, output, purchasing and new export orders all advanced by more than 4 percentage points from February.

The output index gained 5.7 percentage points to 56.9% in March, while the new order index climbed 4.2 percentage points to 54.6%.

New export orders gained 4.1 percentage points to 47.5%.

Experts note that the increase in the index connotes future acceleration in the country’s economic growth.

HK Economy Forecasted to Drop 3% in 2009

Xinhua News Agency reported today that the University of Hong Kong says the country’s economy will contract 3% in 2009 from the 2.5% economic growth in 2008.

Hong Kong economy is projected to contract by 5.8% in the first half of the year, as real gross domestic product is estimated to slip 6.4% in the first quarter and 5.1% in the second quarter.

“Being a small and open economy dependent on trade and financial services, Hong Kong cannot possibly escaped from being battered by the financial crisis which has severely dampened global activity,” explained the report.

Gainers & Losers

Hong Kong stocks gained after news that the country’s PMI rose to 52.4 in March and on expectations that the U.S. economy is on the path to recovery.

Hong Kong Exchanges & Clearing jumped 5.1%. Standard Chartered Plc surged 8% to HK113.30 after Hong Kong Economic Journal reported that the bank was the largest mortgage lender in March, ahead of HSBC Holdings.

Realty stocks increased. Sun Hung Kai Properties advanced 1.2% and Henderson Land soared 4.9%.

China Shenhua rose 4.4% and Angang Steel rallied 5.1%.

Shipping lines rose as brokerage Goldman Sachs upgraded the sector to “neutral” from “cautious.” China Shipping Container Lines increased 11.3% to HK$1.78 after Goldman Sachs upgraded the stock to “buy” from “sell.”

Orient Overseas International gained 12.4% to HK$23.60.

Gold stocks fell after gold prices shed 2% to $908 per ounce. Zijin Mining fell 6% to HK$5.37.

Huabao International Holdings plunged 17.1% to HK$5.78 after the company reported that a major shareholder will sell HK$1.16 billion worth of its shares at a discount to third party investors. The fragrance company major shareholder offered to sell shares at a price between HK$5.98 and HK$6.28 per share.

Towngas China climbed 15.2% after saying it will sell its interest in Pana LPG to Panriver Investments for HK$414.2 million.