Market News Stand July 2008 Friday
News Stand
Market recap:
Shanghai: Chinese shares up 1.95% on bargain hunting
Chinese shares closed higher on Thursday as bargain hunters took advantage of a fall in the key
index at the beginning of the morning session. The benchmark Shanghai Composite Index,
which covers both A and B shares, gained 51.8 points, or 1.95 percent, to close at 2,703.53. The
Hong Kong: Hong Kong shares close sharply lower
Share prices closed sharply lower amid a slew of negative factors, including Wall Street losses,
record oil prices, corporate earnings uncertainty and possible monetary tightening in China. The
Hang Seng index closed down 461.67 points or 2.13 pct at 21,242.78, off a low of 21,163.57 and
US: stocks mostly ahead as jobs data no surprise
U.S. stocks on Thursday ended mostly higher in offering a benign reaction to the government's
report on employment, which declined only a bit more than expected in June, offsetting worries
that the ailing economy is getting worse.
After rising more than 100 points during the holiday-shortened session, the Dow Jones Industrial
Average ended at 11,288.54, up 73.03 points, or 0.7%.
The S&P 500 advanced 1.38 points to 1,262.9, leaving the index down 1.2% from last Friday and
flirting with bear-market turf, down 19.2% from the Oct. 10 closing high of 1,562.
Macro economy:
Bureaus link to battle inflow of 'hot money'
Stepping up the battle against "hot money" flowing into and out of China, three government
departments will link internal electronic systems from July 14 to check foreign exchange receipts
and export settlements, the State Administration of Foreign Exchange said yesterday.
SAFE said it would conduct the checks with the other two departments ― the Ministry of
Commerce and the General Administration of Customs (GAC). With the new online checks,
regulators will be able to compare enterprises' forex receipts and settlements with their exported
goods reported to GAC. After a trial period, the new mechanism will formally operate from
August 4. Mainland enterprises must also report to SAFE their advance export receipts and
deferred payments of imports.
SAFE said that by monitoring advance export receipts and their later actual exports, it would be
able to prevent speculative overseas funds from flowing into the country under the guise of trade.
The administration said that monitoring deferred payments for imports could prevent a possible
CASS: tighter US policy may hit China
Economists are warning policy makers in China to prepare for a tightening in United States
monetary policy during the second half of this year.
Market analysts said they expected the US Federal Reserve Board to raise interest rates in the
second half of the year, as inflation risks began to outweigh recession fears in the world's largest
economy. An expected strengthening of the US dollar following such a rate rise would divert
speculative funds ("hot money") from emerging markets to the US, increase the burden on
countries with heavy foreign debts, and cause a regional economic crisis, He Fan, an economist
at the Chinese Academy of Social Sciences, said in his latest report.
China, with hundreds of billions of US dollars in "hot money" that had already poured into the
country, should closely watch US monetary policy and take much stricter measures to monitor
capital flows in the meantime, said He. Tight money supply that would follow the outflow of "hot
money" would be a concern, said CASS economist Zhang Ming.
Sectors:
Rosy 1H preliminary earnings reports come out
Seven companies announced their preliminary reports for 1H with y-o-y earnings growth more
than 50%, and among them, two companies made revisions to their preliminary reports.
ICBC (601398) estimates its 1H08 net profit to grow more than 50% yoy due to fast growth of net
interest income, fees, commissions and lower income tax rate. SPDB (600000) estimates its
1H08 net profit to grow more than 140% yoy due to expanding assets, higher spread, jump in
non-interest income and lower income tax rate.
Besides, China Merchants Energy Shipping (601872) estimates its 1H08 net profit to grow more
than 80% yoy; Shandong Bohui Paper Industry (600966) to grow 150% yoy; China Fiberglass
(600176) to grow more than 50%.
Food: Grain price remains pressured to rise, official
Global grain supply remains tight but there are signs of easing. Grain supply and demand in
China is basically in balance, the market price is stable but domestic grain price remains
pressured to rise, said Ceng Liying, deputy head of the State Administration of Grain.
Power: coal price 60 yuan higher would throw power
plants in East China into losses
Thermal coal price presents a continuously rising trend and a further rise of 60 yuan per ton
would throw all the power plants in East China region in to losses, says a report based on a
survey among 64 power plants in East China conducted by the East China Electricity Regulatory
Bureau of the State Electricity Regulatory Commission, the industry watchdog. The profitability of
power plants in the region is about 0.01 yuan per KwH.
Auto: Auto excise tax may be raised from Aug.
Unconfirmed sources say that the excise tax rate for passenger cars may be adjusted from Aug.
1
st
; that for high-emission vehicles will be raised significantly and that for vehicles with emission
less than 3.0 L will be basically unchanged. The unconfirmed news caused strong reaction in the
market. Securities Times report.
Transportation: Coordination group set up for high-speed
train innovation
China has set up an inter-agency coordination group to enhance its ability to develop an
advanced and safe high-speed rail system.
The Ministry of Science and Technology (MOST) website, http://www.most.gov.cn/, on Thursday
released the grouping of MOST and the Ministry of Railways (MOR) to coordinate planning,
research and development, industrial manufacturing and equipment upgrades in the country's
high-speed rail sector. MOST Minister Wan Gang, a former Audi chief technologist for hybrid
vehicles, and MOR Minister Liu Zhijun co-chair the group.
MOR has tested the country's first high-speed railway connecting Beijing and Tianjin since the
end of May, with an average speed of 300 km per hour. Last week, President Hu Jintao test rode
the train, which covered 120 km within 30 minutes.
Aviation: China discusses feasibility of large aircraft
program
China's aviation experts have started to discuss the feasibility of the country's large airplane
manufacturing program, something which indicated it had entered an advanced stage of
researching and manufacturing the large aircraft.
The feasibility demonstration of the program includes the overall technology plan, types of
airplanes, customer service and production scale, said a China Aviation Industry Corporation I
(AVIC I) expert who declined to be named. Discussions will also focus on the the large aircraft
program's airworthiness certificate, market prospects, human resources, airborne equipment,
composite materials and financing.
The feasibility was expected to take six months, the source said.
Ping An Insurance (601318) says it won't make provisions
for investment in Fortis
Ping An Insurance (Group) Co said in a statement today that its investment in Fortis will feature a
long-term strategy and the company doesn't need to make any financial provisions even if the
investment incurs a paper loss. The Shenzhen-based insurer said that the investment in Fortis
belongs to its financial assets and should be calculated based on fair value. Earlier media reports
said that Ping An will likely book huge provisions for the investment, which will dent its earnings
in the first half. Shares of Fortis has dropped by nearly a half since Ping An became its biggest
shareholder when it bought a 4.2 percent stake for 1.81 billion euros in November.
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