Bank Lending in Focus in China; Stocks Down

Mayank Mehta
27 Jan, 2010
New York City

Stocks in Shanghai and Hong Kong declined for the fourth day as banking regulators nearly halt new lending for a week. ICBC has tightened its new lending and stopped rolling over debts. Huaneng Group electricity output is up 13%. Yankuang gets approval to develop bauxite project in Australia.

[R]9:00 PM Hong Kong, China – Stocks in Shanghai and Hong Kong declined for the fourth day in a row as banking regulators nearly halt new lending for a week. ICBC has tightened its new lending and stopped rolling over debts. Huaneng Group electricity output in 2009 is up 13%. Yankuang gets approval to develop bauxite project in Australia.[/R]

Stocks in Shanghai and Hong Kong declined as investors worried that lending restrictions will curb future profits at banks and slowdown the economic growth.

Hang Seng index in Hong Kong decreased 76.26 or 0.38% to 20,033.07, and CSI 300 index in China lower 44.23 or 1.36% to 3,198.57.

Chinese banking regulators in a new directive published on its Web site urged banks to follow strict guidelines to issue real estate linked loans. Banks around the major metropolitan areas have stopped writing new loans since Jan 19, according to a research note published by credit Suisse and reported by Bloomberg.

The Wall Street Journal reported that ICBC has asked its branches to stop issuing new loans.

Other Movers

China Merchants Bank Co., Ltd the commercial bank dropped 4.05 to 15.44 yuan.

Huaneng Power International, Inc declined 0.4% to HK$4.27 after the electricity producer and the parent of Huaneng Power International Inc produced 420.1 billion kwh of electricity in 2009, 13% more than in the previous year.

Industrial and Commercial Bank of China Limited rose 0.1% to HK$5.62 and the bank said it has stopped rolling over some loans to slow credit growth after a surge at the start of the year, though it will not halt new lending.

Jiangxi Copper Company Limited dropped 3.6% to 34.37 yuan.

SAIC Motor Corporation Limited fell 2.8% to 20.76 yuan and the auto maker will start producing its self-developed MG-branded sedans in the U.K. and sell the sedans in the E.U. by the end of the year, Reuters reported yesterday, citing its chairman.

SOHO China Limited decreased 1.2% to HK$3.83 after the property developers were downgraded to “in-line” from “attractive” at Morgan Stanley.

Yanzhou Coal Mining Company Limited climbed 2.7% to 20.60 yuan after the coal miner secured regulatory approval from Australia''s Foreign Investment Review Board for its joint venture with Bauxite Resources in Australia, said Wang Xin, general manager of Yankuang Group.

ZTE Corporation slipped 4.4% to HK$43.00 after the phone-equipment maker said it won a contract worth HK$378 million to supply telecoms equipment and services to South African mobile operator Cell C (Pty) Ltd.