China Stocks Advance; China Mobile Earnings

Darlington Musarurwa
20 Oct, 2009
New York City

Stocks in China region gained on the back of a rally in New York and European markets. Dollar weaknesses lifted resource stocks and commodities prices in the region. China Mobile reported nine months earnings as the number of subscribers increase above 500 million.

[R]6:00AM New York, 6:00PM Hong Kong – Stocks in China region gained on the back of a rally in New York and European markets. Dollar weaknesses lifted resource stocks and commodities prices in the region. China Mobile reported nine months earnings as the number of subscribers increase above 500 million.[/R]

Hong Kong and Chinese stocks rose as investors bought into commodities and resource stocks. Dollar traded near its 14-month low against the euro and the yen and may weaken further.

Daily turnover on the Hong Kong Stock Exchange’s main-board increased to HK$74.18 billion from HK$60.6 billion.

Earnings and economic outlook supported the trading sentiment. China is expected to reported third quarter economic expansion at 9% rate and estimates run as high as 10%.

Hang Seng index in Hong Kong increased 184.50 or 0.83% to 22,384.96, and CSI 300 index in China higher 48.42 or 1.45% to 3,377.57.

China to Curb Production Excesses

National Development and Reform Commission deputy department director Xiong Bolin said Beijing intends to curb excessive production in six industries, including steel and cement, according to an article in China Daily.

Production overcapacity exists in steel, cement, glass, coal, chemical industry, polysilicon and wind power equipment.

Bolin indicates production curbs will be achieved by holding back approval or funding for new projects. The report noted that the Rmb4 trillion stimulus package is contributing to the rising production and demand.

Banks have been instructed not to lend money to projects that violate government guidelines.

ADB Grant for China’s Rural Pension Scheme

Asian Development Bank is providing $500,000 to help establish a rural pension scheme and facilitate universal coverage by 2020.

The grant is for the establishment of a policy and regulatory framework for a pilot project that is set to be conducted in 200 rural counties across the country.

Gainers & Losers

China Mobile decreased 0.7% to HK$78.75 after it reported nine months results. Nine months revenues increased 8.9% to Rmb 326.98 billion and net income increased 1.8% to Rmb 83.93 billion.

The largest mobile telecom carrier added 15.24 million new users in the last three months as it lowered service fees and average revenues per subscriber was Rmb 75 per month and the average revenues per month per subscriber increased to 491 minutes from 490 minutes.

Property stocks jumped. R&F Properties climbed 9% and Hang Lung advanced 3.6% to HK$30.20 after it planned to invest HK$4 billion to HK$5 billion in new projects this year.

Retailer Times rose 14.2% after South Korean retailer Lotte Shopping offered H$4.7 billion or $625 million.

Li & Fung dropped 1.2% to HK$34.25 after it agreed to acquire a U.S. men and children’s apparel business for $402 million. Brokerage Morgan Stanley also maintained “overweight” rating on the stock.

Bank of East Asia tumbled 1.7% to HK$29.05 on speculation it intends to raise additional capital.

China Merchants Bank edged up 4.7% as shareholders approved stock offering to raise Rmb 22 billion to boost its capital adequacy ratio.

PetroChina jumped 1.5% after crude oil prices traded near $80 per barrel.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 100.33 or 0.98% to 10,336.84, Hang Seng index in Hong Kong increased 184.50 or 0.83% to 22,384.96, and CSI 300 index in China higher 48.42 or 1.45% to 3,377.57. ASX 200 index in Australia increased 53.40 or 1.11% to 4,846.20. The FTSE Bursa KL Composite index in Malaysia was higher 4.25 or 0.34% to 1,265.74.

The Kospi Index in South Korea increased 10.08 or 0.61% to close at 1,659.15 SET Index in Thailand closed lower 6.01 or 0.82% to 725.60. JSE Index in Indonesia decreased 18.71 or 0.74% to 2,502.22. The Sensex Index in India decreased 103.00 or 0.59% to 17,223.01.