China Stocks Fall on Valuation Worries

123jump.com Staff
16 Jul, 2009
New York City

Stocks in Shanghai traded higher in the morning but close lower on the valuation worries. Sinotruk surged 15% after MAN SE acquired 25% stake in the company. Jiangxi Copper added nearly 4% on strong commodities prices.

[R]7:00 PM Hong Kong, 7:00 AM New York – Economic growth in China accelerates in the second quarter to 7.9% from 6.1% in the first quarter as the stimulus reaches many sectors of the economy. Consumption and investment contributed to the growth but the fall in trade surplus deducted the expansion.[/R]

The gross domestic product in China surged at 7.9% in the second quarter surprising most economists.

The strong economic growth in the second quarter helped China to register 7.1% economic expansion in the first half as the economic stimulus works its way to the various sectors in the economy. The economy grew at 6.1% in the first quarter.

Consumption and investment supported the economic growth and fall in trade surplus trimmed the growth. The consumption increased by 3.8% and investment contributed 6.8 percentage point to the economic expansion.

The yuan in currency trading was nearly unchanged at 6.83 to a dollar after the release of the data.

The People’s Bank of China completed the sale of 50 billion yuan in short term notes of one year duration. The T-bill with one year maturity yielded 1.6%, higher than 1.5% yield in the auction last week.

China also reported yesterday that M2 money supply increased 28.5% in June after the money supply increased at 25.7% in May.

Hang Seng index in Hong Kong increased 103.21 or 0.57% to 18,361.87 and CSI 300 index in China higher 7.94 or 0.23% to 3,501.24.

Gainers & Losers

Stocks in China edged lower after trading higher in the morning on the release of faster economic expansion in the second quarter. But the metal makers and commodities related stocks closed higher.

Jiangxi Copper Company increased 3.7% to 37.24 yuan and Yunnan Copper Industry surged 6.2% to 26.20 yuan.

China Eastern Airlines Corp surged 5% to 6.48 yuan and Air China ltd declined 1.7% to 8 yuan.

SAIC Motor declined 3% to 18.97 yuan and in Hong Kong trading BYD Co increased 1.6% to HK$37.40 after it proposed to expand operations.

Sinotruk surged 15% to HK$8.66 after Germany based MAN SE agreed to acquire 25% stake in the company.

Golden Resources Power Holdings Company decreased 6.3% to 37 HK cents after the wholesaler of agriculture commodities reported loss of HK$167.6 million compared to net income of HK$8.7 million.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 74.91 or 0.81% to 9,344.16, Hang Seng index in Hong Kong increased 103.21 or 0.57% to 18,361.87 and CSI 300 index in China higher 7.94 or 0.23% to 3,501.24. The ASX 200 index in Australia increased 71.10 or 1.81% to 3,995.60. The FTSE Bursa KL Composite index in Malaysia closed higher 11.64 or 1.06% to 1,108.88.

The Kospi Index in South Korea increased 11.36 or 0.80% to close at 1,432.22. SET index in Thailand closed lower 5.12 or 0.87% to 582.74 and JSE Index in Indonesia decreased 5.33 or 0.25% to 2,117.95. The Sensex index in India decreased 2.99 or 0.02% to 14,250.25.