China Region Markets Closed Lower

Darlington Musarurwa
18 Nov, 2009
New York City

Stocks in Hong Kong and Shanghai closed mixed. Resource sector stocks closed higher on the speculation that commodities demand will rise and lift prices. Banks in Hong Kong and Shanghai trading fell on valuation concerns.

[R]6:00AM New York, 6:00PM Hong Kong- China’s economist warns of assets bubbles. Hong Kong stocks fall on profit taking.[/R]

Stocks in Shanghai rose as energy stocks gained on expectations that demand for commodities will lift prices.

However, investors in Hong Kong looked to take profit.

In Hong Kong trading Hang Seng Index fell 0.3% or 78.82 to 22,840.33, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, declined 0.3% or 44.04 to 13,688.01. In Shanghai trading CSI 300 Index edged up 0.1% or 1.88 to 3,630.23.

Daily turnover on main-board increased to HK$76.7 billion from HK$71.6 billion yesterday.

China Warned of Asset Bubbles

Xinhua News Agency reported today that an expert with the Development Research Centre of China’s State Council Wu Jinglian said excessive lending and liquidity in the economy presented long-term challenges in China rather than liquidity challenges and weak demand.

Lenders have injected Rmb8.92 trillion in new loans into the economy in the first 10 months of the year compared with the previous target of Rmb5 trillion.

Jinglian says rising property and equity prices are signs of asset bubbles.

“A credit boom along with a loose monetary policy and positive fiscal policy could prevent the economy from collapse in the short term, but these measures cannot solve the underlying problems,” he said.

According to the report, excessive lending and re-leveraging will produce additional risks to the economy.

Gainers & Losers

China’s energy stocks gained after crude oil prices rose 0.4% to $79.4 per barrel. Changchun Gas rose 10% to Rmb8.75.

In Shanghai, financial stocks rose on expectations of a rising yuan. Industrial and Commercial Bank of China soared 1.3% to Rmb5.57, while in Hong Kong ICBC jumped 1.7%.

Coal stocks gained as recent snow delayed transport. Shenhua Energy climbed 1.5% to Rmb37.99 and Yanzhou Coal increased 2.5% to Rmb21.78.

In Hong Kong, HSBC fell 1% on profit taking. Bank of China plunged 2% and China Construction Bank decreased 0.7%.

Singamas Container fell 10.5% after reporting it plans to sell HK$390 million worth of shares at HK$1.30 per share.

China Mobile gained 2.5% and it plans to sell smartphones from Dell Inc smartphone to be launched in November.

China Strategic Holdings rose 6.7% after agreeing to sell its 30% stake in Taiwan Life Insurance controlled by AIG to Chinatrust Financial.

Far East Golden Resources edged up 5.1% and Melco International declined 3.8%.