Airlines in China Rise; Angang Steel Falls

Darlington Musarurwa
28 Oct, 2009
New York City

Stocks in China region were mixed but traded with a downward bias. Hong Kong government plan to contain real estate priced dragged stocks lower. Airlines gained after three leading carriers return to a quarterly profit. Angang Steel dropped 6% after it estimated as much as 50% fall in annual profit.

[R]6:00AM New York, 6:00PM Hong Kong – Stocks in China region were mixed but traded with a downward bias. Hong Kong government plan to contain real estate priced dragged stocks in the broader markets lower. Airlines gained after three leading carriers return to a quarterly profit. Angang Steel dropped 6% after it estimated as much as 50% fall in annual earnings.[/R]

Stocks in Hong Kong fell but in Shanghai rose on mixed earnings reports. Investors are increasingly cautious about the economic outlook after a sharp rise in real estate prices.

In Hong Kong trading Hang Seng Index declined 1.8% or 408.01 to 21,761.58, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, dropped 2.4% or 314.41 to 12,831.18.

In Shanghai, CSI 300 Index advanced 0.4% or 14.60 to 3,329.33.

Daily turnover on main-board declined to HK$68.97 billion from HK$73.56 billion yesterday.

Hong Kong Exports Fall 16.2% in September

Hong Kong Census and Statistics Department reported yesterday the value of total exports dropped 16.2% for the first nine months of the year to September from a year ago.

The value of re-exports fell 15.3%, while the value of domestic exports fell by 40.8%.

However, the value of imports of goods slipped 15.7%, yielding a trade deficit of HK$150.3 billion for the nine months.

For the month of September, exports plunged 8.6% to HK$226 billion after falling 13.9% the previous month.

The value of re-exports dropped 7.8% to HK$220.8 billion in the month.

According to a government spokesman, the decline in merchandise exports year-on-year slowed markedly in September on increased economic activity in Asia.

Total exports to Asia rose marginally by 0.9%.

Total exports decline in the period were led by a fall in exports to Singapore by 27.4%, United Kingdom by 22.4%, U.S. by 22.4%, Korea by 20.2%, Germany by 16.7%, Japan by 12.8% and to the mainland China by 11.8%.

China’s Value Added Industrial Output Rises in Q3

CCTV.com reported today that China Ministry of Industry and Information Technology said yesterday the value-added industrial output of enterprises above the designated size rose 8.7% year-on-year in the first nine months of the year.

MIIT spokesman Zhu Hongren said, “Production of heavy industry surged 14.8% in September from a year ago. Light industry growth has been relatively moderate, with the growth rate ranging from 6.5% to 11.8% each month.”

Zhu added the annual growth of industrial production is expected to accelerate to about 16% this quarter. Industrial performance for the whole year is likely to be better than expected.

Gainers & Losers

Hong Kong shares dropped dragged by Wynn Macau after its parent company Wynn Resorts announced a bearish outlook. The stock closed down 7%.

Angang Steel plunged 5.8% after it estimated annual profit decline of as much as 50% on depressed steel prices.

Aluminum Corp of China slipped 2.7% despite first quarterly profit of Rmb21.27 million in the September quarter after three successive quarterly losses.

China Shipping Container Lines plummeted 4% after posting a Rmb1.94 billion loss for the third quarter to September.

China Shenshua Energy decreased 1.7%.

Airlines gained after three largest carriers reported quarterly profit. Air China edged up 1.6% and China Southern Air advanced 1.7%.

China Southern Airlines reported third quarter net profit of Rmb284 million ($41 million) compared to a loss of Rmb 830 million in the year ago period.

China Eastern quarterly profit was Rmb23.2 million compared to a loss of Rmb2.33 billion a year ago. The fuel hedge yielded profit of Rmb154 million wiping the operating loss of Rmb73.3 million.

Air China reported third quarter net of Rmb885 million compared to a loss of Rmb1.97 billion a year ago period.

Ping An Insurance fell 2.9% after it issued a cautious outlook for the fourth quarter citing market volatility and low interest rate environment.

Property stocks declined on the worries that the tighter capital requirement for mortgage loans may impact luxury new home sales. New World Development tumbled 4.3% and Sino Land fell 4.6%.