Market Updates

Weak Property, Port Stocks in China

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

    China is expected to offer large stimulus package in the second quarter. Domestic earnings in the property and logistics sector drove market indexes lower. Higher bad debt provisions at Bank of America in the U.S. dragged domestic bank stocks lower.

[R]6:00AM New York, 6:00PM Hong Kong – China is expected to offer large stimulus package in the second quarter. Domestic earnings in the property and logistics sector drove market indexes lower. Higher bad debt provisions at Bank of America in the U.S. dragged domestic bank stocks lower.[/R]

Hong Kong stocks dropped 3% led by financial stocks as Bank of America sharply increased its reserves for future bad debts. The news dragged markets in New York and on the opening in Asia.

In Hong Kong trading Hang Seng Index fell 3% or 465.02 to 15,285.89, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, declined 2.1% or 190.95 to 9,039.09. In Shanghai trading CSI 300 Index dipped 1.2% or 32.22 to 2,675.44.

Daily turnover on main-board increased to HK$57.5 billion from HK$57.1 billion yesterday.

China to Launch More Stimulus in Q2

China Securities Journal reported today that China is considering launching a third batch of stimulus investments in large domestic projects in the second quarter.

The money will be injected in projects to benefit people’s livelihood such as health, education sectors, big infrastructure projects, and housing for low income earners.

Second quarter investment is forecasted to be larger investment than the previously announced packages.

China’s central government has cashed in an estimated Rmb230 billion for the Rmb4 trillion stimulus package that was announced in November.

China’s Retail Sales Rise 18.9% in Q1

China’s Ministry of Commerce reported today retail sales in accommodation and food and beverage industries increased 18.9% to Rmb438.3 billion in the three months to March from the same period a year earlier, which is 3.9 points higher than the growth rate of the retail sales of all consumer goods.

The proportion of the retail sales in the accommodation and food and beverage industries accounted for 14.9% of the retail sales of all consumer goods.

Retail sales in the accommodation and food and beverage industries gained 18.7% to Rmb136.7 billion in March from the comparable year ago period.

In addition, the number of newly established foreign invested enterprises in the accommodation and food and beverage industries fell 43% to 96 in the three months to March from a year earlier.

Total retail sales of consumer goods in the period also advanced 15% to Rmb2.9 trillion.

Real Estate Developers Decline

Country Garden Holdings Ltd. declined 4.5% to HK$2.54 after it reported annual profit decline by 67% to 1.38 billion yuan. The earnings dragged other properties stocks lower. Hang Lung Properties Ltd. dropped 6% to HK$21, Sun Hung Kai Properties Ltd. declined 4% to HK$82.25 and Cheung Kong Holdings Ltd edged lower 2.5% to HK77.30.

Gainers & Losers

The benchmark stock index dropped 3% after Bank of America warned that souring bad debts are increasing.

China Mobile declined 5.1% to HK$70.50 after first quarter earnings declined 5.2%.JP Morgan Chase lowered its earnings for the current fiscal year by 4.8%.

Energy stocks declined after crude oil prices tumbled 9.7% to $45.90 per barrel. CNOOC dropped 5.3% and PetroChina plunged 3.2%.

Sinopec Shanghai Petrochemical gained 7.8% after reporting first quarter profit jumped to Rmb164 million from Rmb200 million loss in the same period a year ago.

Coal stocks dipped. China Shenhua fell 1.7% and China Coal Energy shrank 4.5%.

Financial stocks declined. HSBC edged down 5.1% to HK$52.15 and Standard Chartered slipped 5.1%.

However utilities increased as investors sought defensive stocks. Hong Kong Electric gained 2.1% and CLP Holdings advanced 1.1%.

Metals and resources related stocks declined after a fall in oil, copper and other base metal prices. Chinalco declined 4.6% to HK$5.98, Jiangxi Copper Co. dropped 6.1% to HK$9.28 and PetroChina edged 3.2% lower to HK$6.67.

Gold stocks gained as gold prices advanced 2.2% to $887.5 per ounce. Zhaojin Mining climbed and Lingbao Gold soared 6.1%.

China Merchants Second Half Profit Declined

China Merchants Holdings Ltd dropped 3.5% to HK$19.20 after it reported second half profit fall of 17% to HK1.69 billion. For the year ended on December 31, 2008 earnings rose 4.5% to HK3.76 billion and earnings per share increased2.3% to HK153 cents.

Revenues in the year increased 15.3% to HK$28.17 billion.

The company declared second half dividend of HK40 cents and HK68 cents for the year with payout ratio of 44%.

For container ports, aggregate throughput increased 7.1% to 50.48 million TEU of which 43.58 million TEU was handled in the mainland, an increase of 8.6%. Shanghai International Port Group Co. handled 28.01 million TEU, an increase of 7% from a year ago.

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