Hong Stocks Fall; GCL- Poly in $3.4 B Deal

Darlington Musarurwa
23 Jun, 2009
New York City

Stocks in Hong Kong declined but in Shanghai edged up. The global market weakness and lower commodities prices dragged stocks in Hong Kong lower. GCL-Poly Energy agreed to acquire solar components maker Jiangsu Zhongneng Polysilicon for $3.4 billion.

[R]6:00AM New York, 6:00PM Hong Kong – Stocks in Hong Kong declined but in Shanghai edged up. The global market weakness and lower commodities prices dragged stocks in Hong Kong lower. GCL-Poly Energy agreed to acquire solar components maker Jiangsu Zhongneng Polysilicon for $3.4 billion.[/R]

Hong Kong stocks plunged as commodity stocks continue to retreat on falling crude oil and metal prices.

Shanghai stocks however closed higher after financials rose on market speculation that the People’s Bank of China will lower reserve requirements for banks.

In Hong Kong trading Hang Seng Index fell 2.9% or 521.18 to 17,538.37, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, declined 3.4% or 358.676 to 10,280.13. In Shanghai trading CSI 300 Index rose 0.04% or 1.33 to 3,083.90.

Daily turnover on main-board increased to HK$66.2 billion from HK$62.7 billion yesterday.

China Card Debt Rise 133% to Rmb4.97 billion

People’s Bank of China said today in a report the country’s credit card debt rose 133% to Rmb4.97 billion in the first three months of the year from the comparable period year ago.

Debt overdue by six months or more accounted for 3% of the total outstanding credit card debt at the end of March, or 0.6 percentage point more than in the same period last year.

The central bank also warned about the risks associated with increasing overdue credit card debt as financial institutions expand their credit card business.

In addition, outstanding credit card loans rose 87.6% year-on-year to Rmb165.86 billion at the end of March.

Gainers & Losers

Stocks in Hong Kong focused on commodity stocks as dropping crude oil and metal prices fell.

Financial stocks soared on speculation the People Bank of China will slash the reserve ratio. Bank of China in Shanghai trading jumped 6% but dropped 4.2% in Hong Kong.

Gome increased 68.8% to HK$1.89 after it resumed trading. The company agreed to sell 1.59 million yuan convertible bonds to an affiliate of Bain capital. The company has faced rising debt and other capital constraint after its founder has been under police investigation. The stock has been suspended from trading since October.

Manulife Financial fell 9.8% to HK$141.40 after receiving an enforcement notice from the Ontario Securities Commission that found the company had failed to meet disclosure obligations.

Energy stocks tumbled as crude oil prices fell 3.9% to $6.90 per barrel. PetroChina slipped 4.4%, CNOOC declined 4.3% and Sinopec Corp tumbled 3.7%.

Aluminum Corp of China dipped 6.6% and China Coal Energy contracted 5.2%.

GCL-Poly Energy increased 15.2% to HK$2.88 after the company said that it will issue shares at HK$2.22 and raise HK$26.3 billion ($3.4 billion) to pay for Jiangsu Zhongneng Polysilicon Technology Development Co. Both companies are controlled by founder Zhu Gongshan.

Coal stocks fell after Inner Mongolia announced that it will set up a coal price adjustment fund starting July 1. Huolinhe Opencut Coal Industry of Inner Mongolia dropped 2.9%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 276.66 or 2.82% to 9,549.61, Hang Seng index in Hong Kong decreased 521.18 or 2.89% to 17,538.37, CSI 300 index in China higher 1.33 or 0.04% to 3,083.90. ASX 200 index in Australia decreased 121.30 or 3.10% to 3,796.90. The KL Composite index in Malaysia closed lower 1.49 or 0.14% to 1,044.48.

The Kospi Index in South Korea decreased 39.17 or 2.80% to close at 1,360.54.SET index in Thailand closed lower 12.44 or 2.14% to 569.85 and JSE Index in Indonesia decreased 60.64 or 3.07% to 1,914.38. The Sensex index in India decreased 2.21 or 0.02% to 14,324.01.