Shanghai, HK Indexes Drop 2.4%

Mayank Mehta
26 Jan, 2010
New York City

Indexes in Shanghai and Hong Kong declined more than 2.4% after China tightened the bank lending. The uncertainty of additional monetary steps kept investors away. China Oil and Gas prices its placement near the low end of the range. Foxconn declined on profit warning.

[R]9:00 PM Hong Kong, China – Indexes in Shanghai and Hong Kong declined more than 2.4% after China tightened the bank lending. The uncertainty of additional monetary steps kept investors away. China Oil and Gas prices its placement near the low end of the range. Foxconn declined on profit warning.[/R]

Stocks in Shanghai and in Hong Kong fell sharply after local banks said that China has requested to curtail bank lending.

China has targeted 22% lower lending in the current year to 7.5 trillion yuan, however in the first two weeks banks lent 1.45 trillion yuan or $210 billion. Banks have lent nearly 20% of the entire year quota in the first two weeks of the year.

The lending data was reported by the 21st Century Business Herald today.

Hang Seng index in Hong Kong decreased 489.22 or 2.38% to 20,109.33, and CSI 300 index in China lower 85.22 or 2.56% to 3,242.80. Hang Seng index has declined 12% from its high in November and fallen more than 5% in the year so far.

On the Hang Seng index 42 members, 39 declined.

Other Movers

Banks led the decliners after media reports suggested that China asked banks to curb lending. Bank of China Limited fell 3.4% to HK$3.68 and Bank of Communications Co., Ltd dropped 3.4% to HK$7.90. China Construction Bank Corporation fell 2.7% to HK$5.96.

Baoshan Iron & Steel Co., Ltd declined 2.9% to 7.46 yuan.

China Oil and Gas Group Limited plunged 20% to HK$1.20 after the natural gas supplier’s placement was priced by Deutsche Bank towards the low end of the indicated range between HK$1.23 and HK$1.45 to raise HK$625 million ($80.3 million).

China State Construction Engineering Corporation Limited slipped 3.1% to Rmb 4.27.

Foxconn International Holdings Limited declined 8.2% to HK$8.12 after it guided lower earnings in 2009.

Gemdale Corporation the real estate developer decreased 6.2% to Rmb 11.60.

Huadian Energy Company Limited fell 5.5% to Rmb 4.40 after the distribution of electricity announced that it expects its net loss for fiscal year 2009 to be Rmb 755 million, compared to the profit same period last year of Rmb 14.22 million.

Industrial and Commercial Bank of China Limited decreased 3.2% to HK$5.62.

Poly Real Estate Group Co., Ltd dropped 4.8% to Rmb 18.97 after the company announced that it expects its net profit for fiscal year 2009 to grow by 50%, compared to that of same period last year of Rmb 2.24 billion.