Indexes in Shanghai Surge 80%, in HK 53%

Darlington Musarurwa
31 Dec, 2009
New York City

China region stocks closed higher on the last trading day of the year. The benchmark indexes in Shanghai surged 80% and in Hong Kong advanced 53% in the year on a large government stimulus and increase bank lending.

[R]6:00 AM New York, 6:00 PM Hong Kong – China region stocks closed higher on the last trading day of the year. The benchmark indexes in Shanghai surged 80% and in Hong Kong advanced 53% in the year on a large government stimulus and increase bank lending.[/R]

Stocks in Shanghai and Hong Kong closed higher on the last day of trading. Banks and financial stocks led the gainers in the session. Increased lending from the banks and mainland government stimulus of Rmb 4 trillion or $586 billion has lifted stocks across all sectors.

In Hong Kong trading Hang Seng Index increased 1.8% or 375.88 to 21,872.50, rising 1.7% for the week and gaining 52% in the year, and the China Enterprises Index of Hong Kong listed mainland stocks, or H shares, jumped 2.1% or 263.36 to 12,794.13.

In Shanghai trading, CSI 300 Index edged up 0.5% or 16.83 to 3,515.68. The index is up 80% in the year after dropping 65% in 2008.

Daily turnover on main-board rose to HK$30.05 billion from HK$24.08 billion yesterday.

Markets in Shanghai and Hong Kong are scheduled to reopen on Monday and will be closed on Friday.

Regulators to Curb Chemical Industry

Global Times reported today that deputy director of the raw material department of the Ministry of Industry and Information Technology Yuan Longhua said there was need to keep a tight leash on the chemical industry to “constrain overheating.”

The MIIT will complete a draft for comments on entry conditions for synthesis ammonia producers in the first half of 2010. Yuan noted that Beijing has eliminated outdated coke capacity of 82.54 million tons and outdated calcium carbide capacity of 2.87 million tons.

“There is obvious over-development in the coal chemical sector. We must try to constrain over-heating of the industry through ways like raising the market entry threshold and phasing out obsolete overcapacity,” said Yuan.

Minmetals to Benefit From Chile Mining Deal

China Daily reported today that China Minmetals Corporations, through its subsidiary plans to cooperate with a Guadong based private company to develop iron ore mines in Chile.

Minmetals signed an agreement with Shunde Rixin Development Co Limited to import and market iron ore from Chilean mines owned by Rixin. The company acquired a 76% stake in three Chilean iron ore mines at Rmb13 billion.

Minmetals spokesman Xiao Chunming said the company will not invest or finance any of the three mining projects directly.

Gainers & Losers

Financial stocks rose. China Life climbed 1.7%, Ping An gained 3.5%, Bank of China rose 3.2% and ICBC increased 1.4%.

China Mobile climbed 3.6% after reassuring investors that it is still planning to list the stock in Shanghai. Separately the company said its board will convene to decide if Vice Chairman Zhang Chunjiang can continue with the company. Zhang is already removed from the position of Communist Party secretary at the parent company China Mobile Communication Corp.

China Eastern Airlines Corp increased 1.3% to Rmb 6.16 after the China News Service said that the airline is likely to report earnings in the current year.

Bank of East Asia decreased 1.3% to HK$30.85 after announcing it will sell HK$5.11 billion in new shares for HK$30.60 each to a unit of Spain''s Criteria and Japan’s Sumitomo Mitsui Banking Corp.

PetroChina added 0.9% to HK$9.32 and it plans to buy a city gas business from its parent for Rmb1.09 billion.

CNOOC Ltd gained 2.4% to HK$12.20.

Geely Auto edged up 0.7% to HK$4.27 on projected robust growth for China''s auto industry in 2010. China surpassed the U.S. in unit auto sales in 2009.

In Shanghai, CNR Corp rose 7.7% to Rmb6.13.

Sinopec Corp jumped 0.1% to Rmb14.16 and PetroChina advanced 0.1% to Rmb13.83.