China Lifts Bank Reserves; Higher Stocks

Mayank Mehta
12 Feb, 2010
New York City

Stocks in Shanghai and Hong Kong closed higher ahead of the one week of holidays. China lifted bank reserve requirements by 0.5%. January power consumption surged 40% from a year ago and 2.7% from December. Commodities and resource stocks closed higher.

[R]9:00 PM Hong Kong, China – Stocks in Shanghai and Hong Kong closed higher ahead of the one week of holidays. China lifted bank reserve requirements by 0.5%. January power consumption surged 40% from a year ago and 2.7% from December. Commodities and resource stocks closed higher.[/R]

China increased its reserve requirements for banks for the second time this year. The banks are required to raise the ratio by 0.5 percentage point from the current 16% for large banks and 14% for small banks.

The People’s Bank of China raised the reserve demand for the first time on Jan 12 since July 2008.

The second increase this month is expected to be followed by at least three increases in the rest of the year according to 123jump.com estimate as the foreign funds flows remain high.

Chinese banks have already extended loans of 20% target of 7.5 trillion yen set by the central bank in January.

Stocks in Shanghai traded higher after China raised the bank reserve ration ahead of one week of holiday.

Hang Seng index in Hong Kong decreased 22.00 or 0.11% to 20,268.69, and CSI 300 index in China higher 30.88 or 0.96% to 3,251.28.

Electric power consumption in China surged 40% from a year ago in January after the economy recovered and industrial production rebounded. Total power consumption increased 2.7% from December to 353.1 billion kilowatt-hours according to the National Energy Administration.

Residential power demand increased 25.9% to 44 billion kwh and consumption in secondary industries which includes construction and manufacturing surged 46% to 262.4 billion kwh.

Shanghai Movers

China Oilfield Services Limited added 0.06% to 15.40 yuan after the oil producer was downgraded to “sell” from “neutral” at UBS AG.

China Shenhua Energy Company Limited, the coal producer rose 0.8% to 29.43 yuan after the company said sales increased 25% and production gained 10% from a year ago in January.

Commodities linked stocks closed higher. Zijin Mining Group Co. increased 1.9% to 8.60 yuan, Jiangxi Copper increasd 3.3% to 35.90 yuan and Tongling Nonferrous added 1.8% to 18.83 yuna.

Datang International Power Generational Co. Ltd rose 0.7% to 8.34 yuan after the electricity producer said its parent China Datang Corp., intends to increase its stake in the company by not more than 2% in the next twelve months.

Retailers closed higher ahead of weeklong holiday season that begins next week. Changchun Department soared daily limit of 10% to 8.17 yuan and Hainan Zhuxin Investment Co. added 5% to 10.57 yuan.

HK Movers

BYD Co. decreased 3% to HK$59.35.

Citic 1616 Holdings Limited added 3.4% to HK$2.38 after the company intends to buy 20% stake in Macau Telecom from CITIC Pacific for HK$467 million in cash and issue 405.8 million shares at HK$2.30 a share.

Citic Pacific increased 2.7% to HK$17.60 and HSBC Holdings plc fell 0.8% to HK$80.70.

Property developers increased. Henderson Land Development Co. increased 2.6% to HK$50.60 and Wen Wei Po said today that the company plans to sell 3,200 new homes in the city after the next week of holiday.

Kerry Properties Ltd increased 3.1% to HK$36.90 on a broker recommendation.