Stocks in HK, Shanghai Decline

Darlington Musarurwa
16 Jun, 2009
New York City

Stocks in China region declined on the global worries and tired rally. China lowers its holdings of U.S. Treasury bonds and also committed to lend $10 billion to members of Shanghai Cooperation Organization. Commodities linked stocks traded lower.

[R]6:00AM New York, 6:00PM Hong Kong – Stocks in China region declined on the global worries and tired rally. China lowers its holdings of U.S. Treasury bonds and also committed to lend $10 billion to members of Shanghai Cooperation Organization. Commodities linked stocks traded lower.[/R]

Hong Kong stocks declined 1.8% dragged by a contagion of a global stock sell-off sparked by worries contracting manufacturing activity in the U.S. will affect a global economy recovery.

Commodity stocks fell as gold and crude oil prices dropped.

In Hong Kong trading Hang Seng Index fell 1.8% or 333.46 to 18,165.50, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, declined 1.5% or 161.22 to 10,716.32. In Shanghai trading CSI 300 Index slipped 0.2% or 4.97 to 2,961.22.

Daily turnover on main-board increased to HK$76.5 billion from HK$65.3 billion yesterday.

Hong Kong’s seasonally adjusted unemployment rate for three months ending in May was unchanged at 5.3% from the period ending in April. The jobless rate was unchanged for the first time in nine months.

China to Lend $10 billion to Regional Body

Peoples’ Daily Online reported China’s President Hu Jintao said today the country will extend a $10 billion credit line to the Shanghai Cooperation Organization, a regional group that also includes Russia and four Central Asian states.

The loan is meant to shore up the economies of SCO members amid the global financial crisis.

China Sells $4.4 billion of US Bonds

Separately, the online edition noted that U.S. Treasury Department indicated that China’s holdings in U.S. Treasury Bonds have been reduced to $763.5 billion by the end of April from $769.9 billion in March.

China’s holdings of U.S. T-bonds have constantly increased since May 2008. The report notes that only Britain continued to purchase U.S. bonds in April.

Gainers & Losers

The global sell-off of stocks dragged equities lower on concern falling manufacturing activity in the U.S. will affect economic recovery. Falling commodity prices also took their toll on today’s trading.

Newly listed Lumena Resources Corp. however soared 19% with shares valued at HK$1.2 billion.

Ping An Insurance declined 4.9% on uncertainty over the firm’s plans to increase its stake in Shenzhen Development Bank to 30%. Shenzhen Bank increased 2.7%.

China Life declined 2.5% to 25.09 yuan after it reported insurance premium for the first five months of 145.6 billion yuan.

Brokerage stocks advanced. CITIC Securities edged up 3.5% on expectations of a resumption of IPOs.

Realty stocks tumbled. China Vanke dipped 2.5%.

Commodity stocks fell as crude oil prices declined 2% to $70.6 a barrel and gold prices shed 1.4% to $927 per ounce. PetroChina plunged 2.6% and CNOOC slipped 5.5% to HK$9.90.

Aluminum Corp of China declined 3.5% and China Coal Energy dropped 4.5%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 286.79 or 2.86% to 9,752.88, Hang Seng index in Hong Kong decreased 333.46 or 1.80% to 18,165.50, CSI 300 index in China declined 4.97 or 0.17% to 2,961.22. ASX 200 index in Australia decreased 69.20 or 1.72% to 3,962.50. The KL Composite index in Malaysia closed lower 17.05 or 1.56% to 1,074.12.

The Kospi Index in South Korea decreased 13.27 or 0.94% to close at 1,399.15. SET index in Thailand closed lower 15.38 or 2.51% to 596.54 and JSE Index in Indonesia decreased 39.51 or 1.91% to 2,030.37. The Sensex index in India increased 82.39 or 0.55% to 14,957.91.