Hong Kong stocks open 0.06% lower
Hong Kong stocks fell 12.46 points, or 0.06 percent to open at 21,860.04 on Monday.
On 2010-02-15, In Stocks, By znnw
On 2010-02-15, In Stocks, By znnw
Chinese shares close lower on Monday
Chinese equities closed lower on Monday as the benchmark Shanghai Composite Index went down 1.02 percent, or 33.38 points, to close at 3,243.76 points.
The Shenzhen Component Index lost 1.21 percent, or 166.43 points, to close at 13,533.54 points.
Combined turnover shrunk to 147.97 billion yuan (21.7 billion U.S. dollars), from 220.86 billion yuan on the previous trading day.
On 2010-02-15, In Stocks, By znnw
ABC plans 150b yuan public float
Lender likely to sell shares on Shanghai, Hong Kong bourses
Agricultural Bank of China (ABC), the only bank among the Big Four State-run lenders yet to float shares, is planning to raise up to 150 billion yuan ($21.97 billion) through a dual listing in Shanghai and Hong Kong as early as April this year, people with knowledge of the matter told China Daily.
The nation’s third largest lender by assets plans to issue some 50 billion shares in the Shanghai and Hong Kong bourses, with an indicative price of about 3 yuan for the Shanghai A share, said the source, who did not want to be identified due to the sensitive nature of the matter.
The hefty size of the much-awaited IPO of ABC is comparable to the record-setting $21.9 billion share float of Industrial and Commercial Bank of China (ICBC) in 2006 and surpasses the 120 billion yuan and 100 billion yuan raised by China Construction Bank (CCB) and Bank of China (BOC) between 2005 and 2007.
“The specific amount of shares to be floated in the Shanghai and Hong Kong bourses is yet to be decided,” the source said, but indicated that the Shanghai float would be bigger than Hong Kong.
ABC has been under the market glare for some time now as its restructuring and eventual listing will complete the decade-long reform of the Chinese banking industry, which has cost the government billions of dollars to wipe out the massive bad debts on the balance sheets.
Sources indicated that the nation’s pension fund might invest some 20 billion yuan in the bank. However, apart from the fund, ABC has failed to forge strategic partnerships with other financial institutions from both within and outside the country, the source said.
“The social security fund is the only strategic investor that the bank will bring in before its IPO,” the source said, adding that the two entities aimed to set up a long-term partnership and would look for ways to cooperate on future business developments.
This is a far cry from the other three listed major State-run lenders – ICBC, CCB and BOC – all of which have brought in a number of foreign financial entities as strategic investors, including Goldman Sachs, Bank of America, UBS, and Royal Bank of Scotland, before their IPOs for cooperation as well as expertise in corporate governance and risk control.
ABC specializes in serving the nation’s 800 million farmers and is considered the weakest lender among the Big Four banks. Its plan to introduce foreign strategic investors ran into rough weather after the global financial crisis saw most Western financial institutions putting off their plans and in some cases selling or reducing their stakes in Chinese lenders.
ABC received a $19 billion capital infusion in October last year from Central Huijin, the domestic investment arm of China’s sovereign wealth fund, making it 50 percent owned by the latter. The Ministry of Finance owns the other half.
On 2010-02-15, In Stocks, By znnw
Hong Kong stocks end 0.23% down
Hong Kong stocks fell 49.22 points, or 0.23 percent, to end at 21,823.28 on Monday, the first trading day of 2010.
A woman passes by a board displaying the Hang Seng Index of the Hong Kong Stock Exchange in Hong Kong, south China, Jan. 4, 2010. Hong Kong stocks fell 49.22 points, or 0.23 percent, to end at 21,823.28 points on Monday. (Xinhua/Song Zhenping)
The benchmark index opened 0.06 percent lower at 21,860.04 after the public holiday on Friday. The stocks traded between 22, 024.83 and 21,689.22 before closing.
Turnover rose to 48.51 billion HK dollars (6.26 billion U.S. dollars) from Thursday’s 30.05 billion HK dollars (about 3.88 billion U.S. dollars).
Chinese financial companies led the decline of Hong Kong stocks, tracking the fall of Shanghai index over the timing of Beijing’s withdrawal of stimulus measures.
Traders expected that Hong Kong stocks to trade between 21,000 to 22,000 in the new year due to the investors adjustments’ on their portfolios.
China Enterprises Index went down 43.58 points, or 0.34 percent, to close at 12,750.55 points.
The four major stock categories ended mixed. The finance sub- index and commerce and industry sub-index dropped 0.5 percent and 0.03 percent respectively. The utilities moved up 0.56 percent, the properties rose 0.16 percent.
Blue-chips closed lower. Banking giant HSBC Holdings slightly fell 0.17 percent at 89.25 HK dollars. Heavyweight China Mobile, by far the largest mobile carrier in China’s mainland, almost fell0.69 percent to 72.35 HK dollars. HKEx, the sole exchange operator in Hong Kong, lost 0.72 percent to 138.4 HK dollars.
Local properties ended mixed. Cheung Kong, the flagship of HongKong’s richest man Li Ka-shing, fell 0.3 percent to 100 HK dollars. Henderson Land finished 0.34 percent higher at 58.6 HK dollars. SHK Properties moved down 1.17 percent to 116.1 HK dollars.
Mainland-based commercial lenders dived. CCB fell 1.2 percent to 6.59 HK dollars. ICBC fell 1 percent to 6.37 HK dollars.
Chinese insurance companies also ended down. China Life fell 0.7 percent to 38.1 HK dollars. Ping An moved down 0.7 percent to 67. 5 HK dollars.
As for energy shares, PetroChina fell 0.32 percent to 9.29 HK dollars, off-shore oil producer CNOOC rose 0.33 percent to 12.24 HK dollars, Sinopec Corp moved down 2.6 percent to 6.73 HK dollars. (7.8 HK dollars = 1 U.S. dollar)
On 2010-02-15, In Stocks, By znnw
Equities decline on policy change woes
Property shares led declines yesterday as the Shanghai municipal government tightened tax and mortgage rules.[China Daily]
China’s stocks fell on the first trading day of the year as Shanghai tightened tax and mortgage rules, bolstering prospects the government will step up measures to curb property speculation.
The Shanghai Composite Index fell 33.38, or 1.02 percent, to close at 3243.76, snapping a four-day rally. The gauge surged 80 percent last year after government spending and bank lending helped revive growth in the world’s third-largest economy.
The CSI 300 Index dropped 1.13 percent to 3535.23.
“There’s uncertainty over the government’s policy on the property industry,” said Zhao Zifeng, who helps oversee about $10.2 billion at China International Fund Management Co in Shanghai.
“For the broader market, the situation is bright as listed companies are expected to achieve growth for a second straight year amid the economic recovery.”
Poly Real Estate fell 2.2 percent to 21.9 yuan ($3.21). China Vanke Co, the nation’s biggest listed property developer, lost 1.9 percent to 10.6 yuan. Gemdale Corp, the fourth largest, retreated 2.7 percent to 13.51 yuan.
Home buyers must prove they are first-time purchasers before they can benefit from a reduced tax on property transactions, the Shanghai municipal government said in a statement on its website on Dec 31.
Separately, Guangzhou’s government announced tougher penalties for developers hoarding land, the South China Morning Post said yesterday.
“These policy changes will likely raise the transaction and funding costs of most speculative transactions,” Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong, said in a note. “Other major cities such as Beijing, Guangzhou, Shenzhen and Hangzhou will likely follow suit.”
SAIC Motor Corp led gains by automakers after the nation’s manufacturing expanded by the most in five years in December. SAIC gained 3.2 percent to 26.96 yuan.
Chongqing Chang’an Automobile Co, the Chinese partner of Ford Motor Co and Mazda Motor Corp, climbed 3.4 percent to 14.5 yuan.
A purchasing managers’ index rose to a seasonally adjusted 56.1, HSBC Holdings Plc and Markit Economics said yesterday. The measure is based on a survey of more than 400 manufacturing companies.
The PMI number was the highest since April 2004, the first month of the HSBC survey. The official PMI, which was released on Jan 1 and has a different methodology, showed the biggest expansion in 20 months.
“We remain optimistic in 2010,” said Sun Chao, an analyst at CITIC Securities Co in Shanghai. “We continue to see improvement in the economic front and that will be reflected in corporate earnings.”
Hang Seng dips
Hong Kong shares closed down 0.23 percent yesterday, its first trading day for 2010, as mainland banks fell on worries over fund-raising plans and policy changes.
The benchmark Hang Seng Index ended down 49.22 points at 21823.28. The China Enterprises Index of top locally listed mainland stocks fell 0.34 percent to 12750.55.
The mainland’s top lender Industrial and Commercial Bank of China fell 1.09 percent to HK$6.37 (82 cents). China Construction Bank lost 1.2 percent to HK$6.59.
On 2010-02-15, In Stocks, By znnw
Index futures likely to debut in March
Equities rose yesterday following reports that the regulator would introduce futures contracts on the country’s stock indexes as early as March, with securities firms recording sharp gains.
The benchmark Shanghai Composite Index rose 1.2 percent to close at 3,282.18. CITIC Securities gained 4.9 percent to 32.82 yuan while Everbright Securities hit the 10-percent daily trading limit to 27.24 yuan.
Sources close to the securities regulator told China Daily yesterday that the new financial mechanism is ready to be launched, but did not give an exact date.
Stock index futures are agreements to buy or sell an index at a preset value on an agreed date.
Bloomberg reported yesterday that the State Council has given the China Securities Regulatory Commission approval “in principle” to introduce index futures and the first contract, based on China’s CSI 300 Index, may begin trading after the annual National People’s Congress in March.
The new instrument would allow Chinese investors to profit from declines in share prices and hedge risks for the first time. It will also help curb volatility in a market that slumped nearly 65 percent in 2008 and rebounded over 80 percent last year.
Analysts said while the new mechanism would trigger a bull rally in blue-chips and heavyweight shares, it could also lead to a possible correction.
“Blue chips usually lead the gains prior to the launch of the index futures as they are the most sought-after stocks by institutional investors,” said Liao Qing, an analyst with Sealand Securities.
“But once the mechanism is in place, the market is likely to see a correction as investors would face pressures to sell,” he said.
It is expected that margin trading and short selling would also be launched soon as part of the preparations for introducing index futures.
But Liao said it would be feasible to have index futures first as market rules and conditions are already ripe and the introduction of margin trading and short selling can wait till more detailed regulations are announced.
“Details of margin trading and short selling are still not clear and the business is much more complicated than index futures as it involves each individual stock and securities firm,” he said.
Analysts feel that the new financial mechanism may not be open to qualified foreign institutional investors for now as the regulator intends to protect the interests of domestic investors first.
On 2010-02-15, In Stocks, By znnw
Deutsche Bank: Stock rally likely to fade this year
A rally by China’s stocks may fade from the second quarter as inflation triggers “significant policy tightening” by the government and the US economy weakens, Deutsche Bank AG said.
The MSCI China Index may still end the year 15 percent higher, Ma Jun, Deutsche Bank’s Hong Kong-based China economist, said in a note to clients. The index tracking mostly mainland companies traded in Hong Kong jumped 59 percent last year after losing 52 percent in 2008.
“We see upside potential to the indices in the first few months, as the macro environment should remain favorable,” Ma said. “CPI and asset inflation will likely pose major macro challenges and the resulting policy responses will cause market risks,” he wrote, referring to the consumer price index.
Deutsche Bank joins Morgan Stanley in predicting an end to China’s rally in 2010 as inflation accelerates and the government withdraws some stimulus. Morgan Stanley analysts led by Jerry Lou said on Dec 15 they expect a “boom and bust” by the nation’s equities this year as gains in the first half stall.
A record 9.2 trillion yuan ($1.3 trillion) of loans in the first 11 months of this year has added to the risk of asset bubbles and resurgent inflation. The nation’s consumer prices climbed 0.6 percent in November from a year earlier, snapping a nine-month run of deflation.
‘Bubble’ concern
Accelerating inflation may inflate a “full-blown” bubble in China’s stock and property markets this year, BofA Merrill Lynch Research’s China strategist David Cui said on Dec 28. Investors may divert savings into equities and housing as the pace of inflation outstrips interest on bank accounts, Cui said.
Premier Wen Jiabao pledged on Dec 27 to tackle “excessive” property-price gains in some cities after prices across 70 cities rose at the fastest pace in 16 months in November.
The government said yesterday it would restrict credit for purchases of second homes to curb speculative housing investments, as well as crack down on property hoarding by developers.
Deutsche Bank’s Ma said deceleration of year-on-year growth and a second dip in the US will also “negatively affect” Chinese stocks from the second quarter.
Nobel Prize-winning economist Paul Krugman said this week he sees about a one-third chance the US economy will slide into a recession during the second half of the year as fiscal and monetary stimulus fade.
Ma recommended investors buy insurers, as well as consumer and agriculture companies on rising prices, and avoid refining and power companies.
His top stock picks include Ping An Insurance (Group) Co, China’s second-biggest insurer, New World Department Store China, which operates upscale department stores in China, and Texwinca Holdings Ltd, a producer of knitted fabric.
Deutsche Bank expects China’s economic growth to accelerate to 9 percent in 2010 from 8.4 percent last year, Ma said.
On 2010-02-12, In Stocks, By znnw
Equities slide as govt applies brakes
Chinese stocks fell on expectations of government moves to limit lending and curb surging property prices. [China Daily]
China’s stocks fell the most in two weeks, led by banks and automakers, on concern government steps to curb lending growth and property speculation will slow expansion in the world’s third-largest economy.
SAIC Motor Co, the country’s biggest carmaker, plunged 4.4 percent on prospects auto sales will slow this year after the government withdrew some stimulus. Industrial and Commercial Bank of China Ltd (ICBC), the nation’s largest listed lender, and China CITIC Bank Corp dropped more than 2 percent as an increase in rates on three-month bills for the first time in 19 weeks signaled tighter liquidity.
“Growth will probably slow this year as tight credit will dampen the demand side,” said Zhang Ling, who helps oversee about $7.21 billion at ICBC Credit Suisse Asset Management Co in Beijing. “That will dash investors’ hope of another year of fast growth.”
The Shanghai Composite Index slid 61 points, or 1.9 percent, to 3,192.77 at the close, the biggest decline since Dec 22. The gauge has lost 2.6 percent in the first four days of trading this year, after rallying 80 percent in 2009. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, retreated 2 percent to 3,471.46.
ICBC lost 2.4 percent to 5.21 yuan ($76 cents). CITIC Bank slid 3.4 percent to 7.67 yuan. China Minsheng Banking Corp, the nation’s first privately owned bank, slipped 2.7 percent to 7.70 yuan.
The People’s Bank of China offered 60 billion yuan of bills at a yield of 1.3684 percent. Policymakers will seek “moderate” loan growth to support the economy while managing inflation expectations, the bank said yesterday in a report on its annual work meeting.
‘Tightening liquidity’
“It’s definitely a signal that the central bank is tightening liquidity,” said Jiang Chao, a fixed-income analyst in Shanghai at Guotai Junan Securities Co, the nation’s largest brokerage by revenue. “The rising yield is used to prevent excessive growth in bank lending.”
China may have about 7.5 trillion yuan of new bank lending this year, the China Securities Journal reported, citing an unidentified person. Banks extended a record 9.21 trillion yuan of new loans in the first 11 months of 2009.
SAIC slid 4.4 percent to 24.12 yuan. The stock jumped 388 percent last year as tax cuts helped sales surge. The automaker has forecast a rise of less than 15 percent in industry-wide sales this year, compared with a 42 percent gain in the first 11 months of last year, as the government increased taxes.
FAW Car Co, which makes passenger cars in China with Volkswagen AG, retreated 4.1 percent to 22.94 yuan, the biggest drop since Nov 27. Chongqing Changan Automobile Co, the Chinese partner of Ford Motor Co and Mazda Motor Corp, slid 4.9 percent to 13.50 yuan.
Slowing car sales
“I don’t think last year’s explosive growth will be sustained this year,” said Zhang at ICBC Credit Suisse Asset Management. “Car sales will slow down.”
The crackdown on property prices also poses risks for the economy after the government tightened tax and mortgage rules for second-home purchases.
China needs to sustain an “unprecedented” building boom in the first half of this year because export growth is limited and consumer spending is not yet sufficient to be the main driver in the economy, said Mark Williams, an economist at the Capital Economics Ltd in London.
Premier Wen Jiabao said on Dec 27 that last year’s doubling in new loans had caused property prices to rise “too quickly”.
Liu Mingkang, the top banking regulator, wrote in an opinion piece in Bloomberg News this week that “structural bubbles threaten to emerge” in the world’s fastest-growing economy.
On 2010-02-12, In Stocks, By znnw
Index futures get regulatory approval
The government on Friday gave the green light for stock index futures, margin trading and short selling in a milestone move that ends the one-way trade in the capital market.
An official with the China Securities Regulatory Commission (CSRC) said on Friday that the State Council has approved stock index futures, short selling and margin trading “in principle”. The regulator said it would take three months to complete preparations for index futures.
The new tools would protect investors against losses and also help them to profit from any declines. Until now, Chinese investors could only profit from gains in equities.
Analysts said the announcements are unlikely to cause any sharp volatility in the A-share market next week as the rumors have already been factored in.
“The market is unlikely to see huge fluctuations next week as the introduction of new financial tools has been discussed for years,” said Zhang Qi, an analyst with Haitong Securities.
Index futures are essentially agreements to buy or sell an index at a preset value on an agreed date. Investors can also borrow money to buy securities or borrow securities to sell under the business of margin trading and short selling.
Zhang said the move would be positive for blue-chips and heavyweight stocks as the contract would be initially based on China’s CSI 300 Index that tracks the 300 biggest shares traded in Shanghai and Shenzhen.
“Index futures are expected to bolster the market value of blue-chips,” he said.
Large listed securities firms such as CITIC Securities and Haitong Securities will also directly benefit from the new business and could see a surge in their revenues, Zhang said.
Analysts expect the new tools to improve liquidity by attracting more capital into the equity market as the government plans to cut back bank lending to 7.5 trillion yuan ($1.1 trillion) in 2010 from last year’s 9.21 trillion yuan.
China’s securities regulator has been considering the introduction of index futures since 2006 when Shanghai set up the China Financial Futures Exchange to prepare for the running of the new mechanism. The plan had been held up till now along with the proposals for margin trading and short selling.
In 2007, CSRC chairman Shang Fulin said that the infrastructure and regulations needed for index futures and margin trading are in place.
Institutional investors are expected to be the mainstay of the new business as the threshold is high for retail investors who are more vulnerable to potential risks, said analysts.
On 2010-02-12, In Stocks, By znnw
Hong Kong stocks end 1.63% higher, tracking U.S. gains
The benchmark Hang Seng Index of Hong Kong closed 1.63 percent higher at 21.829.72 on Friday, tracking overnight gains on the Wall Street following better-than-expected quarterly results announced by tech chip Cisco.
The Hang Seng Index gained 0.35 percent over the past week. Analysts said resistance was turning strong as the blue chip index moved near the 22,000 mark, adding that the index also managed to hold above the support level of 21,000 recently.
Turnover totaled 64.43 billion HK dollars (8.26 billion U.S. dollars), compared with Thursday’s 60.77 billion HK dollars (7.79 billion U.S. dollars).
Forty-one of the 42 constituents of the Hang Seng Index turned out gainers. The finance sub-index, one of the four major stock categories, advanced 1.72 percent. The properties category added 1. 92 percent and the commerce and industry, 1.58 percent.
The utilities sub-index gained 0.37 percent.
Banking giant and market heavyweight HSBC rose 1.6 HK dollars, or 1.88 percent, at 86.85 HK dollars, alone contributing a rise of57 points to the Hang Seng Index.
China Mobile, the leading mobile carrier on the Chinese mainland and a market heavyweight, rose 0.75 HK dollars, or 1.03 percent, to close at 73.9 HK dollars. Smaller rival China Unicom surged 3.26 percent at 10.76 HK dollars.
The Industrial and Agricultural Bank of China, the largest commercial lender on the Chinese mainland, rose 1.73 percent. China Construction Bank and the Bank of China gained 1.04 percent and 1.55 percent, respectively.
China Life rose 2.04 percent and Ping An advanced 1.35 percent.
PetroChina, the business conglomerate of the oil industry, advanced 1.65 percent, and Sinopec, whose business scope covers mainly refining, advanced 1.34 percent. CNOOC, the offshore oil producer, surged 3.37 percent at 12.26 HK dollars.
Computer maker Lenovo, with improving results announced earlier, finished unchanged at 4.44 HK dollars after moving to as high as 4. 6 HK dollars during the day.
Cheung Kong, the flagship of Hong Kong’s richest man Li Ka- shing, was up 1.67 percent at 97.35 HK dollars. Sun Hung Kai Properties, the leading residential housing developer in Hong Kong, gained 2.47 percent to close at 116.3 HK dollars.
HKEx, the sole exchange operator, closed up 1.67 percent at 140HK dollars. (7.8 HK dollars = 1 U.S. dollar)