China Manufacturing Indexes Show Gains

Darlington Musarurwa
01 Dec, 2009
New York City

Two separate indexes tracking manufacturing activities in China show expansion in November. Markets in Hong Kong and Shanghai increased as global worries of Dubai led contagion ebb. China

[R]6:00 AM New York, 6:00 PM Hong Kong – Two separate indexes tracking manufacturing activities in China show expansion in November. Markets in Hong Kong and Shanghai increased as global worries of Dubai led contagion ebb. China’s credit card debt increases 126.5%.[/R]

Stocks in China rose after a measure of manufacturing activity expanded for the ninth straight month in November.

In Hong Kong trading Hang Seng Index rose 1.3% or 291.65 to 22,113.15, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, jumped 1.9% or 249.03 to 13,229.36. In Shanghai trading CSI 300 Index increased 1.4% or 49.16 to 3,560.83.

Daily turnover on main-board declined HK$74.90 billion from HK$79.84 billion yesterday.

Dubai Worries Ease for Now

Markets in Asia and China rebounded for the second day in a row after investors fears of Dubai led financial contagion receded. Crude oil and gold gained more than 1% as investors returned to metals and commodities markets. The prospect of debt restructuring dimmed the fear of wider contagion.

Global markets rebounded after Dubai World initiated talks to restructure less than half of $59 billion of loans. Investors’ fears of wider contagion involving Russia, Ireland and Greece for now are ebbing.

Dubai World said that restructuring talks with lenders are “constructive” and is seeking to delay the repayment of $26 billion of loans. For now there appears to be no talks to reduce the debt burden and at least nine lenders are involved in direct talks. HSBC, Standard Chartered Plc, Royal Bank of Scotland and Barclays are among these banks.

China’s Manufacturing Activity Rises in November

HSBC reported today China’s Purchasing Managers Index, which measures manufacturing activity increased to 55.7 from 55.4 in October. Also the China government agency Federation of Logistics and Purchasing index of purchasing manager was unchanged at 55.2 compared to a month ago.

A measure above 50 in both indexes shows expansion, while a figure below 50 indicates contraction.

In the private index tracking the eleven components of the index, four rose, four declined, and three remained flat. However, the new export orders component of the PMI declined 53.6 in November from 54.5 in October.

China Credit Card Debt Rise 126.5%

People’s Bank of China reported today the country’s credit card debt at least six months overdue gained 126.5% from a year ago to Rmb7.4 billion in the first three quarters of 2009.

Debt overdue by six months or more contributed 3.4 % of the total outstanding credit card debt at the end of the third quarter.

According to the central bank, there is increased risk of rising overdue credit card debt on expansion of credit card business.

Credit cards issued by Chinese banks rose 33.3% to 175 million by the end of September from the same period a year ago.

Gainers & Losers

Financial stocks rose. HSBC gained 1.1% to HK$91.65, ICBC jumped 2.3% to HK$6.70 and Bank of China gained 1.6% to HK$4.44.

The auto maker BYD edged up 9.4% to HK$74.10.

Air China advanced 9.8% to HK$13.66 and the airline recently increased its stake in the international carrier Cathay Pacific Airways Ltd to 30% from 17.5%.

Cathay Pacific increased 3.2% to HK$13.66.

Commodity stocks jumped. Zijin Mining climbed 6.5% to HK$8.65 after it offered to buy Australian miner Indophil Resources for A$545 million from Xstrata plc.

TCC International surged 18.2% to HK$3.84 after announcing it has entered into a memorandum of understanding to buy cement and clinker maker in China from Prosperity International for HK$4billion.

Also, Prosperity gained 7.4% to HK$0.51.

Haier Electronics edged up 9.5% to HK$4.72 on reports Haier Group is negotiating with Qingdao Haier to sell its 31.9% stake in Haier Electronics.

CNPC rose 3.8% to HK$9.04.

In Shanghai airlines gained. China Eastern Airlines soared 2.4% to Rmb6.30 as regulatory authorities approved its merger proposals with Shanghai Airlines.

Shanghai Airlines climbed 2.2% to Rmb6.96.

Air China increased 4.6% to Rmb8.95 as China Business News reported it has won a public bid to take over major assets of troubled airline East Star Airlines.

Zhejiang Feida Environmental Science and Technology soared 10% to Rmb 9.50 and Yunnan Jinggu Forestry edged up 5.1% to Rmb10.68.