China Q3 Expansion; Evergrande Reas Estate IPO

Darlington Musarurwa
19 Oct, 2009
New York City

State controlled media and other economists are predicting third quarter economic growth in China at 9% ahead of the data release on October 22. The economic stimulus and rising bank lending and brisk real estate market is supporting the economic growth. Evergrande Real Estate in $800 million IPO.

[R]6:00AM New York, 6:00PM Hong Kong – State controlled media and other economists are predicting third quarter economic growth in China at 9% ahead of the data release on October 22. The economic stimulus and rising bank lending and brisk real estate market is supporting the economic growth. Evergrande Real Estate in nearly $800 million IPO.[/R]

Hong Kong market averages advanced leveraged on the hopes that economic expansion has accelerated in the third quarter to 9%. China is scheduled to release the data on October 22.

In Hong Kong trading Hang Seng Index increased 1.2% or 270.56 to 22,200.46, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, edged up 1.5% or 96.27 to 12,947.73. In Shanghai trading the CSI 300 Index climbed 2.7% or 87.45 to 3,329.16.

Daily turnover on main-board dropped to HK$60.6 billion from HK$68.6 billion on Friday.

China’s Economy to Rise 9% in Q3

Peoples Daily Online reported today that a consensus among economists indicate that Chinese economy is expected to expand at 9% rate in the third quarter as the government stimulus of $585 billion lifts the demand.

Development Research Centre of the State Council researcher Zhao Jinping said the gross domestic product is forecasted to rise 9% in the third quarter from the same period a year ago.

“With the recovery of the world economy and trade environment, foreign trade, although still weak, will play a less negative role in the country''s economy,” said Zhao.

China’s Academy of Social Sciences also believes that the economy will exceed 9% in the period under review.

Hong Kong Jobless Rate Falls to 5.3%

Hong Kong reported today on its government Web site that the country’s unemployment surprisingly dropped to 5.3% in the three months ending September 30 as the economy regains its footing.

Economists had earlier forecasted the rate will remain at 5.4%.

Secretary for Labour and Welfare Matthew Cheung said employers might adopt “a more positive attitude towards recruitment” as business conditions improve and the labor market stabilizes.

CBRC Urges Banking to Lend More

China Banking and Regulatory Commission noted on its Web site on Friday it is urging banks to both quicken lending and improve risk management.

CBRC said the country’s five major banks- Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of Communications- took 47% of the total bank loans in the country during the first three quarters this year.

In addition, the banks have maintained a steady credit line of less than Rmb200 billion in monthly new lending during the third quarter.

Evergrande Real Estate IPO

Evergrande Real Estate Group Ltd plans to raise HK$6.05 billion or $781 million through a sale of 1.51 billion shares at a price per share between HK$3.00 and HK$4.00.

The real estate company plans to use the proceeds to repay 888 million yuan debt. Chairman Joseph Lau of Chinese Estate Holdings Ltd and Cheng Yu-tung have agreed to take 14% of the offering.

Gainers & Losers

China and Hong Kong equities rose spurred by expectations that the China’s economic growth rose more than forecasted in the third quarter.

Foxconn International jumped 9%, on expectations that its earnings will improve as the global economy stabilizes. Merrill Lynch maintained a “buy” rating on the stock.

BOC Hong Kong soared 4.2% after CIMB raised its price estimate to HK$20.80 from HK$19.20, citing the expectations the lenders’ earnings and return on equity will rebound next year.

CNOOC climbed 4.2% and PetroChina edged up 3% as crude oil prices gained 1.2% to $78.5 per barrel.

Chinese property stocks advanced after local newspaper reported rising apartment sales in Shenzhen. China Vanke last week in a statement said that per square meter price for the properties sold increased 26% from a year ago to 10,170 yuan or nearly $1,500.

China Vanke advanced 6.8% to 12.34 yuan and China Merchants Property Development Co surged 9.8% to 29.80 yuan.

Pharmaceutical stocks jumped on speculation on a merger rumor.

Shanghai Pharmaceutical Shanghai Zhongxi Pharmaceutical and Shanghai Industrial Pharmaceutical Investment all rose 10%.

Jiangxi Copper edged up 7.4%.