China Stocks Rise, FDI Drops 21%

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

Stocks in Hong Kong and Shanghai edged higher after a note in the official China Securities Journal suggested revised taxes and fiscal guidelines. The revision was interpreted by market experts as additional measures from the government to stimulate economic growth.

[R]6:00AM New York, 6:00PM Hong Kong - China’s FDI falls 20.6% to $21.8 billion in the first quarter. China’s overseas investments increase in three months to March.[/R]

In Hong Kong trading Hang Seng Index increased 0.6% or 89.46 to 15,696.62, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, edged up 1% or 90.55 to 9,305.46. In Shanghai CSI 300 Index advanced 0.4% or 10.12 to 2,686.99.

The note in the official China Securities Journal on the new guidelines and policies for fiscal and tax issues was interpreted by the market as additional incentives.

Daily turnover on main-board declined to HK$66.3 billion from HK$75.4 billion yesterday.

China’s FDI Drops 20.6% to US$21.8 billion in Q1

China’s Commerce Department reported today that the country’s actual use of foreign direct investment plummeted 20.6% to $21.8 billion in the first quarter ended March from the comparable year ago period.

Newly approved foreign funded companies also fell 34.5% to 4,554 in the period.

The direct investment from foreigners dropped 32.7% in January, 15.8% in February and 9.5% in March.

The FDI in the real estate industry dipped 38.3%, while investment in the service industry shed 31.3% to $8.42 billion in the March quarter.

In addition foreign direct investment increased in communication, computer and electronic equipment manufacturing 11.5% and pharmaceutical manufacturing 10.3%.

China Overseas Investments Soar in Q1

Separately, the Ministry of Commerce noted the number of companies set by China abroad gained 6.8% to 445 companies in the three months ended March from the same period a year ago.

Turnover by China’s overseas contracted investments increased 32.6% to $12.43 billion as new contracts signed soared to $33.55 billion.

U.S. Retail Sales Declines 1.1% in March

The U.S. Commerce Department reported that retail sales surprisingly declined 1.1% in March from a revised increase of 0.3% in February, dropping the most in three months. Economists had earlier forecasted that sales will rise 0.3%.

Sales dropped for furniture stores, clothing stores and auto sales. The report says in the review period auto sales plunged 2.3%, while retail sales, excluding auto sales, fell 0.9% in March after increasing 1% in February.

Separately, the Labor Department noted that wholesale prices climbed 1.2% in March on falling prices of gasoline and food. Gas prices slipped 13.1% and food prices dipped 0.7%.

Gainers & Losers

Hong Kong stocks increased on expectations that Beijing will extend additional support to industries.

Li & Fung dropped 10.4% after the U.S. Commerce Department reported that retail sales dropped in March. Brokerage HSBC downgraded the stock to “underweight” from “neutral.”

China Mobile increased 4.8%.

Shipping lines increased. China Cosco edged up 9% and carrier China Shipping Development gained 8.8%.

Coal stocks gained on expectations that demand will rebound in 2009.Yanzhou Coal jumped 7.3% and China Shenhua Energy rose 3.6%.

Dongfeng Group fell 1.5% notwithstanding a report the company’s earnings increased by 7% in 2008 as Deutsche Bank cut its rating on the stock to “hold” from “buy.”