Hang Seng Drops 2.1%; Banks, Developers Fall

Mayank Mehta
22 Mar, 2010
New York City

Stocks in Hong Kong fell sharply after India raised rates. Banks and property developers led the decliners. *XH Air China increased its stake in Shenzhen Airlines to 51%. Bank of China shareholders approve convertible bond issuance plan. Poly Real Estate Group plans to raise $1.4 billion.

[R]7:00 AM Hong Kong, China – Stocks in Hong Kong fell sharply after India raised rates. Banks and property developers led the decliners. *XH Air China increased its stake in Shenzhen Airlines to 51%. Bank of China shareholders approve convertible bond issuance plan. Poly Real Estate Group plans to raise $1.4 billion through private placement.[/R]

Stocks in Hong Kong fell sharply on the weakness in property developers and banks after India unexpectedly raised interest rate.

Hang Seng index in Hong Kong decreased 437.57 or 2.05% to 20,933.25, and CSI 300 Index in China higher 8.76 or 0.27% to 3,302.63.

The indexes struggled on the worries that China may follow India in tightening monetary conditions and raise rates.

Separately at a forum in Beijing, the IMF official warned the dangers of high debt and stimulus spending in wealthy nations. First Deputy Managing Director John Lipsky said wealthy nations face severe challenges in lowering high public debt and deficits may remain high even after the unwind of existing stimulus measures.

Banks in Hong Kong fell sharply. HSBC declined 2.1%, China Construction Bank fell 1.9% and Industrial & Commercial Bank of China decreased 2.7%.

Shanghai Movers

Air China Limited added 1.8% to 12.55 yuan after the carrier said *XH Air China increased its stake in Shenzhen Airlines to 51%.

Bank of China Limited rose 0.2% to 4.16 yuan after the lender announced that its shareholders have approved the plan to issue a maximum 40 billion yuan of A-share convertible bonds to replenish the bank''s capital.

CITIC Securities Company Limited, the financial broker fell 0.5% to 28.07 yuan.

China Eastern Airlines Corporation Limited advanced 3.4% to 7.56 yuan after the carrier announced that the company will establish a wholly owned subsidiary, Shanghai Airlines Co., Ltd., with a registered capital of 500 million yuan.

China Telecom Corporation Limited closed unchanged at 3.56 yuan an integrated information service provider said 2009 revenues rose 12% to Rmb 209.4 billion from Rmb 186.5 billion a year ago. Net profit in the year rose 1,531% to Rmb 14.4 billion compared to net profit of Rmb 884 million a year ago.

Poly Real Estate Group Co., Ltd dropped 1.2% to 20.60 yuan after the property developer plans to raise up to 9.6 billion yuan ($1.4 billion) through a private placement.

HK Movers

China Overseas Land & Investment Limited controlled by the nation’s construction ministry fell 3.8% to HK$16.30 after Cosco International Holdings Ltd said it has not decided to sell its stake in the company. Earlier Xinhua News Agency had speculated that the company may sell its entire stake.

China Resources Land Limited the state-controlled developer dropped 2.0% to HK$16.36.

Henderson Land Development Company Limited fell 3.1% to HK$54.60 and the developer is expected to build 10,000 apartments as it redevelops more than 30 sites in Hong Kong, Radio Television Hong Kong reported March 19, citing Chairman Lee Shau-kee.

Shenzhen International Holdings Limited fell 1.5% to HK$0.62.

Tingyi (Cayman Islands) Holding Corp fell 4.0% to HK$19.58 after the instant noodles said 2009 revenues rose 19% to $5.08 billion from $4.27 billion a year ago. Net profit in the year rose 47% to $383.2 million or 6.85 cents per diluted share compared to net profit of $260.4 million or 4.66 cents per share a year ago.