China stocks end down, new IPOs weigh

July 28, 2010 By Leave a Comment

July 27 (Reuters) – China’s key stock index closed down half a percent on Tuesday, as expected large initial public offerings (IPOs) weighed on sentiment and analysts said the index was readjusting after six consecutive days of rises.

The Shanghai Composite Index .SSEC ended at 2,575.4, after closing up 0.7 percent on Monday, snapping a rally inspired by confidence that China would maintain stable economic policies.

Large fundraisings, including Agricultural Bank of China’s (601288.SS) hefty IPO, have weighed on the index, while Beijing’s clampdown on the speculative property sector triggered a near 30-percent drop in the index this year, until the recent rebound.

Sentiment was dampened on Tuesday after the China Securities Regulatory Commission said it would review an IPO application for ShanXi Securities, but analysts said new issuances were unlikely to halt market gains substantially.

“After Agricultural Bank’s huge listing, other listings are not likely to unsettle the market much. Today’s fall is because there is a need for some technical adjustment, this is normal,” said Wen Lijun, analyst at Nanjing Securities.

Wen said in the near term the index could extend its recent rally to 2,800 points on optimism that economic policies will remain stable for the rest of the year to bolster growth.

Volume slipped to 85 billion yuan ($12.54 billion) from Monday’s 88 billion yuan. Turnover had picked up significantly in the previous week, with analysts citing the potential for further rises.

Losing Shanghai shares outnumbered gainers 574 to 306. (Reporting by Farah Master; Editing by Jacqueline Wong)

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UPDATE 1-Japan steel output falls in June from May

July 21, 2010 By Leave a Comment

TOKYO, July 20 (Reuters) – Japan’s crude steel output fell 3.8 percent in June from the previous month, data showed on Tuesday, and the industry association head warned that a build-up of inventories in China had clouded the outlook for exports.

Crude steel output came to 9.35 million tonnes in June, down 3.8 percent from May but marking a 35.9 percent rise from June last year, the Japan Iron and Steel Federation said. The figures are not seasonally adjusted.

Eiji Hayashida, chairman of the federation and president of JFE Steel Corp, told a news conference that inventories of cars and other steel-using products have been rising in China since late June, somewhat clouding the outlook for exports.

Japan’s government had forecast last month that Japan steel output would total 26.82 million tonnes in the July-September quarter, up 10 percent from the same period a year earlier but down 4.3 percent from the previous quarter. [ID:nTOE65H020]

Signs of a slowdown in China’s property sector have led to heavy inventory correction in the region and stronger downward pressure on prices since mid-April, raising concerns that Japanese steelmakers will be forced to cut back on their exports.

Japanese steelmakers, including Nippon Steel Corp (5401.T), the world’s fourth biggest, and No.5 JFE Holdings Inc (5411.T) now generate nearly 50 percent of their steel revenues from exports as domestic demand remains sluggish. (Reporting by Yuko Inoue)

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China stocks end up 2.1 pct on stable policy outlook

July 20, 2010 By Leave a Comment

July 19 (Reuters) – China’s key stock index closed up 2.1 percent on Monday, boosted by expectations that the government will maintain stable economic policies for the rest of the year.

Premier Wen Jiabao said on Sunday that China’s economy was responding appropriately to stable policies, adding “relatively fast” growth would help create jobs and boost domestic demand. [ID:nTOE66H00H] The Shanghai Composite Index .SSEC closed at 2,475.4 points after shedding 1.9 percent last week. The index, which is one of the world’s worst performers, second only to Greece, has lost over 24 percent of its value since the start of the year.

Yuan-denominated A-shares have been hard hit by Beijing’s moves to cool the country’s fiery property sector, while a raft of recent initial public offerings including that by Agricultural Bank of China (601288.SS) (1288.HK) have sapped investor demand.

“Investors are more confident that economic policies will remain stable and there is not a large possibility of major changes,” said Xu Yinhui, analyst at Guotai Junan Securities in Shanghai.

AgBank was the most active stock, ending up 0.7 percent, while property heavyweight Gemdale (600383.SS) rose 1.7 percent.

Shanghai’s property sub-index .SSEP was up 2.3 percent.

Turnover picked up to 79 billion yuan ($11.7 billion) versus 56 billion yuan on Friday. Volume has been picking up in recent sessions, indicating the possibility of a potential upward path for the index.

Gaining shares outnumbered losers 894 to 19. (Reporting by Farah Master; Editing by Jason Subler)

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China stocks gain 2 pct on stable policy expectations

July 20, 2010 By Leave a Comment

July 19 (Reuters) – China’s key stock index rose more than 2 percent in afternoon trade on Monday, boosted by expectations that the government will maintain stable economic policies for the rest of the year.

Premier Wen Jiabao said on Sunday that China’s economy was responding appropriately to stable policies, adding “relatively fast” growth would help create jobs and boost domestic demand. [ID:nTOE66H00H] The Shanghai Composite Index .SSEC rose to as high as 2,483.9 by 0638 GMT, following a 1.9 percent decline last week. The index, which is one of the world’s worst performers, second only to Greece, has lost over 24 percent of its value since the start of the year.

Yuan-denominated A-shares have been hard hit by Beijing’s moves to cool the country’s fiery property sector, while a raft of recent initial public offerings including that by Agricultural Bank of China (601288.SS) (1288.HK) have sapped investor demand.

“Investors are more confident that economic policies will remain stable and there is not a large possibility of major changes,” said Xu Yinhui, analyst at Guotai Junan Securities in Shanghai.

AgBank was the most active stock, trading up 0.4 percent at 0631 GMT, while property heavyweight Gemdale (600383.SS) rose 1.9 percent.

Shanghai’s property sub-index .SSEP was up 2.2 percent. (Reporting by Farah Master; Editing by Jason Subler)

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Spain’s cajas face no stress test shocks: association

July 19, 2010 By Leave a Comment

(Reuters) – Spain’s banks or cajas will get no nasty surprises with the release of stress tests later this week, the director general of the Spanish Confederation of Savings Banks (CECA) said in a newspaper interview on Sunday.

Many analysts have warned that Spain’s savings banks could suffer the most when stress tests are published on Friday alongside those for other European banks, given many are heavily exposed to a badly hit property sector.

Yet the CECA’s Jose Antonio Olavarrieta, asked if there would be any surprises for Spanish lenders, was quoted as saying by ABC newspaper: “I don’t believe there will be, either for the cajas or the banks.”

However, he did not discount a bank having to seek more capital from the Bank of Spain’s restructuring fund FROB, set up to help a consolidation process among the cajas to halve their numbers from 45 and strengthen the financial position of the weaker ones.

Olavarrieta also said he hoped the tests would help improve conditions in money markets, which have shut out smaller Spanish banks over fears the country could face a similar debt crisis to that of Greece.

“If the tests are positive and confidence is reestablished then there will be more credit and liquidity in the markets,” he was quoted saying.

Speaking in a separate interview in La Vanguardia newspaper, the chairman of the CECA and of La Caixa savings bank Isidre Faine also said banks and cajas would not have problems with the stress tests given their clear balance sheets and sufficient mortgage guarantees on the loans they had made.

But he said the sector still had work to do in terms of reducing costs and making more capital provisions.

(Reporting by Nigel Davies; Editing by David Holmes)

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China shares end up 0.8 pct, property sector firm

July 15, 2010 By Leave a Comment

July 14 (Reuters) – China’s key stock index ended up 0.8 percent on Wednesday, rebounding from the biggest single-day percentage drop in two weeks the day before, led by construction and property firms on optimism further tightening policies will not be too severe as economic growth slows.

The Shanghai Composite Index .SSEC finished at 2,470.4 points, after closing down 1.6 percent on Tuesday.

Analysts said firmer sentiment will help underpin Agricultural Bank of China’s [ABC.UL] debut in Shanghai on Thursday although investors remained generally cautious.

“Volume was still very thin ahead of AgBank’s listing. That means investors are adopting a cautious stance, awaiting its listing ” said Zheng Weigang, an analyst at Shanghai Securities.

He said that if volume breached 100 billion yuan, discounting turnover from AgBank’s listing, the index may find momentum to rise above the 2,500-point level that has proved a strong resistence.

Volume edged up to 70 billion yuan ($10.34 billion) from Tuesday’s 61 billion yuan.

Real estate stocks, which had slumped on Tuesday after the government said it would continue its clampdown on property speculation, eased from earlier session highs but retained most of their speculative rebound.

China’s stock market, one of the world’s worst performing this year, down nearly 25 percent, has been hard hit by Beijing’s moves to cool the mainland’s real estate fever, with investors closely eyeing any policy moves for new market direction. (Reporting by Chen Yixin and Jacqueline Wong)

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China stocks in biggest percentage fall in 2 weeks

July 14, 2010 By Leave a Comment

July 13 (Reuters) – China’s key stock index ended down 1.6 percent on Tuesday after the government said it would continue to rein in speculation in the country’s red-hot property sector, following recent media reports that had indicated it was relaxing credit controls.

The Shanghai Composite Index .SSEC closed at 2,450.3 points, chalking up its biggest single-day percentage fall in two weeks. It closed up 0.8 percent on Monday, supported by optimism that the government was relaxing property tightening policies.

China’s stock market, one of the world’s worst performing this year, down around 25 percent, has been hard hit by Beijing’s moves to cool the mainland’s real estate fever.

Chinese banks should “strictly implement” existing curbs on loans to multi-home buyers, the China Banking Regulatory Commission (CBRC) said on Tuesday. [ID:nTOE66C004]

“The market has received a blow from this news,” said Zhang Gang, an analyst at Central Securities. “We expect the index will still trade below 2,500 points in the near term.”

Shanghai’s property sub-index .SSEP slumped 3.2 percent. (Reporting by Chen Yixin and Jacqueline Wong)

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Nikkei down on China worry; earnings hope a support

July 14, 2010 By Leave a Comment

TOKYO, July 13 (Reuters) – Japan’s Nikkei edged lower on Tuesday, weighed as Shanghai shares fell after China said it had no plans to relax tougher property measures anytime soon, but falls were checked by hopes for U.S. earnings later in the day.

Though the market rose in early trade on broad short-covering as traders took heart from Alcoa’s (AA.N) stronger than expected quarterly profit, resistance appeared to be growing around 9,660, roughly the level of the Nikkei’s 25-day moving average.

China’s key stock index fell nearly 2 percent after the government said it would continue to rein in speculation in the country’s red-hot property sector, weighing on shares throughout Asia. [ID:nTST000264]

“There’s a lot of Chinese economic indicators coming out later this week, and investors have gotten pretty nervous ahead of the numbers,” said Takashi Ushio, head of the investment strategy division at Marusan Securities.

“But Alcoa’s results were quite good and we have Intel later today, with both of these offering support.”

Intel Corp (INTC.O) reports later on Tuesday, and other companies reporting this week include JPMorgan Chase & Co (JPM.N) and General Electric Co (GE.N).

“Although there’s a sense of selling fatigue, investor sentiment is still bearish, and the market is looking for a catalyst. Corporate earnings could be one,” said Naoki Koga, a senior fund manager at Toyota Asset Management.

“Intel’s earnings are a focus because they always illustrate a trend.”

The benchmark Nikkei .N225 erased morning gains to edge down 0.1 percent to 9,537.23, while the broader Topix shed 0.4 percent to 854.39.

U.S. stocks eked out small gains in thin trade on Monday before Alcoa, the largest U.S. aluminium producer, posted a stronger-than-expected second-quarter profit and raised its estimate for global aluminium consumption, sending its shares up 3 percent. [ID:nN12206110]

Chairman and Chief Executive Klaus Kleinfeld told Wall Street analysts that strong industry fundamentals were expected to drive demand for aluminium in the next 10 years with average growth of 6 percent a year.

But by afternoon U.S. stock futures SPc1 had given up earlier gains to edge down 0.2 percent.

The Nikkei’s next upward target is around 9,660, its 25-day moving average, which is a proxy for a one-month moving average that is closely watched in Japan. On daily Ichimoku charts, a popular charting method among Japanese traders, its kijun-sen — an indicator of medium-term trends — comes in around 9,671, becoming additional resistance.

The next target after that lies around 10,250, roughly the level of the Nikkei’s June high.

The technical picture is growing increasingly bright, with the Nikkei’s MACD, a measure of market momentum, heading up after a bullish cross.

CHINA BRUISING

Shares with large exposure to China slipped, with Hitachi Construction (6305.T) down 1 percent to 1,717 yen and Komatsu (6301.T), the world’s second-largest maker of earth-moving equipment, down 1.6 percent to 1,698 yen.

Shanghai copper slipped and London prices extended Monday’s falls on investor worry on the global economy, with trading companies taking a hit as a result.

Itochu Corp (8001.T) shed 1.7 percent to 704 yen and Sumitomo Corp (8053.T) lost 1.3 percent to 932 yen. Mitsui O.S.K. Lines (9104.T), which rose in morning trade, slipped 1.2 percent to 582 yen.

But a broad range of exporters clung to gains made on morning short-covering, with Canon Inc (7751.T) up 0.3 percent at 3,460 yen and Tokyo Electron (8035.T) up 1.7 percent at 4,910 yen.

Shares of Fast Retailing (9983.T), the operator of the Uniqlo casual-clothing chain, climbed 1 percent to 12,700 yen after it said it would set up a venture with Bangladeshi microfinance specialist Grameen Bank. [ID:nTOE66C03N]

Denso Corp (6902.T), Japan’s No.1 car parts maker, rose 1.3 percent to 2,658 yen after it announced it would establish an aftermarket sales company in Dubai in November to strengthen its business in the Middle East and North Africa.

Trade picked up, with 1.88 billion shares changing hands on the Tokyo exchange’s first section, the highest in two weeks. Declining shares outpaced advancing ones by more than 3 to 1.

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Nikkei gives up gains as China worry weighs

July 14, 2010 By Leave a Comment

July 13 (Reuters) – Japan’s Nikkei edged lower on Tuesday, weighed down as Shanghai shares fell after China said it had no plans to relax tougher property measures anytime soon, though falls were checked by hopes for U.S. earnings later in the day.

China’s key stock index .SSEC fell 1.6 percent after the government said it would continue to rein in speculation in the country’s red-hot property sector, weighing on shares throughout Asia. [ID:nTST000264]

The benchmark Nikkei .N225 shed 0.1 percent or 10.88 points to 9,537.23 after earlier rising nearly 1 percent. The broader Topix fell 0.4 percent to 854.39.

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Wales Plans Stricter Green Building Rules

July 10, 2010 By Leave a Comment

A series of planned measures announced by the Welsh Government this morning will mean new buildings in the country will have to be greener.

Wales will take over powers for new building regulations on December 31, 2011, giving the Welsh Government the legal right to put greener construction rules in place.

The government says it will consult on detailed proposals during 2012 with plans to put new greener construction rules in place for 2013.

Welsh environment minister, Jane Davidson, announced the measures, which she hopes will not only cut carbon emissions but also boost the economy.

Part of the new measures will see new flats and houses built with combined heating, lighting and hot water bills as low as £7.50 a week by 2013, according to Davidson.

Welsh builders will be legally required to use a combination of green technologies including heat pumps, photovoltaics, solar hot water and higher building standards will help achieve lower carbon emissions and fuel bills.

Davidson emphasised the need to “strike the right balance” between Wales’ ambitious agenda on climate change and setting standards that did not make the cost of new building “prohibitively expensive” with the risk of stalling the housing market and losing the social value of new housing.

Davidson said: “My approach is ambitious but pragmatic. My department has been working to identify the policy ‘sweet spot’ — the standard that gives us the most progressive response to climate change we can manage but allows for a healthy construction and property sector.

“The task in setting a target for the first changes has been to find the most environmentally progressive balance between reducing energy demand and maintaining a healthy housing market attractive to construction companies and developers.”

Davidson set out the targets during a visit to a “super green” housing development in St. Athan in the Vale of Glamorgan.

Chapel Close is a development of 16 houses and apartments which have been made available for affordable rent to residents with a local connection.

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China banks unlikely to face systemic risk – Moody’s

July 1, 2010 By Leave a Comment

June 29 (Reuters) – Chinese banks would see their bad loan ratios creep up in the next few years but it was unlikely that they would face a systemic crisis similar to that suffered by their Wall Street counterparts two years ago.

Financials

“Lending to the real estate sector and local government financing vehicles in 2009 are sources of future growth in non-performing loans,” said Yvonne Zhang, China banking analyst of Moody’s Investors Service.

Potential losses from the two sectors could hit Chinese bank profitability, but the likelihood of a downgrade on their financial ratings was slim, partly because of the country’s robust economic growth, said Zhang, who covers a portfolio of Chinese banks including top lenders Industrial and Commercial Bank of China (0349.HK)(601398.SS) and China Construction Bank (0939.HK)(601939.SS) for Moody’s from Beijing.

“As long as the Chinese economy maintains its fast growth, we think the performance of major Chinese banks will not be too bad,” Zhang told clients at a briefing in China’s financial hub on Tuesday. “One positive is the quick policy response from the government, which could help mitigate systemic risk.”

The China Banking Regulatory Commission this month said “unwise lending” to local government investment units was among key risks faced by Chinese banks.

Chinese banks may have as much as 7 trillion yuan ($1.03 trillion) in loans to local government financing vehicles on their books, latest official data showed.

A correction in China’s property sector after the government introduced a range of policies to curb surging real estate prices could also hit banks in the next few years as heavily-leveraged home buyers may default on their loans.

All major Chinese banks have announced massive fundraising plans to replenish their capital bases after a lending spree last year to support the country’s 4 trillion yuan stimulus programme. (Reporting by Soo Ai Peng; Editing by Chris Lewis)

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China shares end down 0.1 pct, turnover shrinks

June 25, 2010 By Leave a Comment

June 24 (Reuters) – China’s key stock index closed down 0.1 percent on Thursday in thin volume, after investors took quick profits from modest early gains and a technical rally in banking stocks failed to boost the broader index.

China’s benchmark Shanghai Composite Index .SSEC ended at 2,566.7 points, remaining below the psychological resistance level of 2,600 points that has capped the market during attempts to rally throughout the month.

China’s A share market has been one of the world’s worst performers this year, down nearly 22 percent, after the government unveiled a raft of policy measures to deflate speculation in the mainland’s bubbling property sector. The index is down 17 percent so far this quarter.

Banks were broadly higher, boosted after details emerged about the price range for Agricultural Bank of China’s [ABC.UL] planned mammoth initial public offering in Hong Kong and Shanghai, which were largely in line with expectations. Analysts said the added clarity helped to soothe investor jitters ahead of the large influx of shares into the Shanghai market.

The market lacked momentum for a significant rise in the near term, analysts said, as it awaited further signals on key factors that have weighed on sentiment such as property policies and the outlook for economic growth.

“Today we are just moving in a narrow range. The possibility for a break above the 2,600 level is not great,” said Zheng Weigang, senior trader at Shanghai Securities.

Losing stocks outnumbered gainers 465 to 404, while volume shrank to a 17-month low of 51 billion yuan ($7.49 billion) from Wednesday’s already light 61 billion yuan. (Reporting by Farah Master; Editing by Edmund Klamann)

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China stocks up on AgBank IPO details; HK flat

June 25, 2010 By Leave a Comment

HONG KONG/SHANGHAI, June 24 (Reuters) – China’s key stock index rose 0.4 percent by midday on Thursday, erasing earlier losses, with banks gaining on further detail over the price range for Agricultural Bank’s mammoth initial public offering in Hong Kong and Shanghai.

Hong Kong shares were flat at mid-session in sluggish trade after the Federal Reserve issued a mixed economic outlook and as investors wound down to the end of the second quarter.

Agricultural Bank of China Ltd [ABC.UL] plans to raise as much as $11.4 billion through the Hong Kong portion of its IPO, sources close to the deal said, setting a price range that keeps the lender on track for the largest IPO on record. [ID:nN23237479]

The Shanghai Composite Index .SSEC was at 2,579.8 points, remaining below the psychological resistance level of the 2,600 point mark which has capped the market during attempts to rally earlier in the month.

China’s A-shares have been one of the world’s worst performing this year, down 21 percent, after the government unveiled a raft of policy measures to deflate speculation in the mainland’s bubbling property sector. The index is down 17 percent this quarter.

“Clarity over Agricultural Bank’s price range has given banking shares momentum to rally. The market already has an idea of what to expect for final A share pricing,” said Xu Yinhui, analyst at Guotai Junan Securities.

Banks rose broadly with all lenders listed on the Shanghai and Shenzhen stock exchanges higher.

Bank of Communications (601328.SS), the most active stock on the index, rose 2.4 percent while second-most active Merchants Bank (600036.SS) rose 0.5 percent. Minsheng Bank (600016.SS) the fourth-most active rose 1.1 percent while ICBC (601398.SS) rose 0.7 percent.

Volume remained extremely thin, falling to 26 billion yuan from Wednesday’s 32 billion yuan, while gaining Shanghai shares outnumbered losers 571 to 276.

HONG KONG TEPID

Hong Kong’s benchmark Hang Seng Index .HSI meandered in a range of 117 points, before ending up 10.4 points at 20,867.02.

Market turnover fell to HK$26.8 billion ($3.45 billion), from midday Wednesday’s HK$32.13 billion.

Dealers said that in addition to the seasonal slowdown, investors had no catalysts to buy stocks, with many awaiting major announcements from the G20 meeting in Toronto this weekend.

Shares traded in a tight range, after the Federal Reserve downgraded its assessment of U.S. economic recovery but renewed its vow to hold benchmark interest rates low. [ID:nN22150078]

“We’re consolidating around this level,” said Jackson Wong, investment manager at Tanrich Securities. “Fund managers are dressing up their portfolios by buying the laggards.”

The index has fallen about 2 percent so far this quarter and is down roughly 5 percent in the year to date.

“We have a good chance to challenge 21,200,” he said. “The debt crisis in Europe seems to have cooled down a little bit and the U.S. is on the rebound. The sentiment is still positive.”

Consumer goods exporter Li & Fung Ltd (0494.HK) rose as much as 1.4 percent to a six-week high after the company told Reuters in an interview that it expects its U.S. business to grow and did not see a double-dip in the U.S. economy as it had already emerged from recession. [ID:nTOE65M05I].

By midday, the stock was up 1 percent.

Lenovo Group (0992.HK) rose 3.7 percent after the head of its Indian market said the company expects to get a double-digit share of India’s computer market soon, as the world’s No.4 PC brand bets on emerging markets to fuel its growth. [ID:nSGE65L0GC] (Editing by Jacqueline Wong)

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China stocks rise 0.1 pct, investor enthusiasm wanes

June 23, 2010 By Leave a Comment

June 22 (Reuters) – China’s key stock index closed up 0.1 percent on Tuesday, inching to a fresh three-week high although investor enthusiasm waned about potential yuan appreciation as the currency retraced after a rally against the dollar.

Shanghai shares had surged on Monday in their biggest one-day rise in four weeks after the central bank relaxed currency controls and unexpectedly allowed the yuan CNY=CFXS to reach its highest against the dollar since a July 2005 revaluation.

The Shanghai Composite Index .SSEC ended at 2,588.7 points, holding steady after Monday’s 2.9 percent gain.

The country’s stock market remains one of the world’s worst performers this year, however, down 21 percent after authorities unleashed a range of policies to ease speculation in the red-hot property sector.

“The index appears to be trying to get past psychological resistance at 2,600 but has been unable to break through,” said Zhang Qi, an anaylst at Haitong Securities.

Gaining Shanghai shares outnumbered losers 595 to 262 while volume eased to 66 billion yuan ($9.71 billion), in one of the three lightest sessions of the past four months, versus Monday’s 81 billion yuan. ($1=6.796 Yuan) (Reporting by Chen Yixin and Edmund Klamann)

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UPDATE 1-China regulator warns on property, local gov’t risks

June 16, 2010 By Leave a Comment

BEIJING, June 15 (Reuters) – The global economic recovery is likely to be “slow and tortuous” and China faces risks from a multitude of factors including trade protectionism and bad real estate loans, China’s Banking Regulatory Commission (CBRC) said on Tuesday.

“The chances in 2010 of some credit assets forming into substantive risks and losses has increased,” the CBRC said in its annual report, published on its website on Tuesday.

Among the risks faced by Chinese banks, it identified quite large risks from “unwise lending” to local government investment units, as well as the sovereign debt crisis and U.S. dollar exchange rates.

It said some banks were lending large amounts to local governments units, noting “risk management has been inadequate, and there are quite large latent risks in lending to local investment vehicles.”

CBRC’s chairman, Liu Mingkang, has repeatedly said the regulator will strictly control the speed of lending and is paying special attention to lending risks in the property sector.

The government has also warned of the dangers of China’s red-hot property market, which it has described as one of the country’s most pressing economic problems, and has tried to get banks to rein in property lending.

CBRC’s annual report also warned of risks from “imprudent behaviour” in personal housing loans in 2010.

“The risks from a chain reaction in lending for real estate development may warrant attention, and latent credit risks may be increasing,” said the report, posted here

Last week, China reported that the year-on-year pace of bank lending and money supply growth slowed in May and new local currency-denominated loans extended in May fell to 639 billion yuan from 774 billion yuan in April. [ID:TOE65A019] (Reporting by Chris Buckley and Tom Miles; Editing by Ken Wills)

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China stocks post worst mth since Aug 2009, HK weaker

June 1, 2010 By Leave a Comment

HONG KONG/SHANGHAI, May 31 (Reuters) – Shares in Shanghai closed out a dismal month on a weak note on Monday, posting their biggest ever monthly fall since last August on concern over further tightening in the real estate sector after the government said it would implement property tax reform.

In Hong Kong, persistent fears about a government move to clamp down on real estate speculation also pressured shares, which eased 0.01 percent on Monday to their biggest monthly fall since January.

China’s benchmark Shanghai Composite Index .SSEC fell 2.4 percent, ending the day at 2,592.146 points.

China’s State Council, or cabinet, said on the central government’s website on Monday that it would gradually start to reform property tax policies. The announcement came after a report that Shanghai’s government had submitted a property tax plan to the central government.

Analysts said the announcement from the state council had a negative impact on the market and could prevent a rebound in the near term.

“The report that Shanghai had submitted a property tax plan did not worry the market as much as the State Council’s announcement,” said Wen Lijun, analyst at Nanjing Securities. “There is a possibility that a property tax could emerge, with the market waiting for further confirmation on policies. This has a big impact on A-shares.”

Shanghai’s property index .SSEP fell 2.6 percent, with property firm Gemdale (600383.SS), the second-most active share on the Shanghai index, down 4.3 percent.

Shanghai’s stock index has been one of the worst performing in Asia, down 21 percent on the year, after China a introduced range of policies to tame speculation in the country’s red-hot property sector.

The index has steadied in recent sessions but is still down 10 percent on the month.

China State Construction Engineering Co (601668.SS), the country’s top developer and construction company, fell 1.6 percent.

Property shares have borne the brunt of Shanghai’s stock market falls in recent months and are down 29 percent on the year.

Losing Shanghai stocks outnumbered gainers 817 to 73, while turnover fell to 87 billion yuan ($12.74 billion) from Friday’s 98 billion yuan.

Bank of China (601988.SS) was the most active counter on the Shanghai index, up 2 percent, after the country’s No.3 lender said it would issue a convertible bond this week. [ID:nTOE64T01W]

WORST FALL SINCE JAN

The benchmark Hang Seng Index .HSI ended the day down 0.01 percent or 1.52 points at 19,765.19, snapping a three-day rally, on news that Hong Kong’s government had decided not to award the tender for a HK$33 billion ($4.24 billion) housing project, suggesting that the city’s real estate market was continuing to stagnate under government measures to curb speculation. [ID:nTOE64R071]

The China Enterprises Index .HSCE of top locally listed mainland Chinese stocks closed down 0.12 percent at 11,494.31.

Property-related stocks in Hong Kong fell. MTR Corp (0066.HK) slipped 1.3 percent, while New World Development (0017.HK) lost 1.6 percent.

Although Hong Kong shares — which are down 6.4 percent for the month and about 9.6 percent for the year — are ripe for a recovery, June could be a tepid month for stocks, said Castor Pang, research head at Cinda International.

“The market will not have a strong rebound,” he said. “It will only trade in a range of 1,000 points. There’s still too much uncertainty about European countries.”

For the month, Hong Kong stocks were largely dragged down by fears of the impact the euro zone debt crisis could have on the global economy and concern about China’s clampdown on the property market.

“At this moment, I don’t think we should sell any sectors,” said Steven Lam, vice-president at Karl Thomson Securities. “They have had a major correction, so valuations are attractive.”

Dealers said investors were cautious about taking positions with public holidays on Monday in the United States and Britain.

Turnover reached HK$47.6 billion ($6.11 billion), considerably lower than Friday’s HK$71.7 billion. (Editing by Chris Lewis)

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China’s economy grew 11.9 percent in first quarter: sources

April 16, 2010 By Leave a Comment

(Reuters) – China’s economy grew about 11.9 percent in the first quarter from a year earlier, topping expectations and the fastest annual pace in nearly three years, according to two market sources.

China

Consumer price inflation in March was roughly 2.4 percent year-on-year, below forecasts and a deceleration from February’s 2.7 percent rate, one of the sources said.

China is scheduled to publish its first-quarter GDP growth rate and a suite of economic data for March on Thursday.

Despite the economy’s rapid growth — an annual rate of 11.9 percent would be the fastest since the second quarter of 2007 — the government on Wednesday struck a note of caution.

“The economy’s fast-paced growth is the result of policy stimulus to a relatively big degree and it is also because of the low base effect compared with last year,” the State Council, or cabinet, said in its quarterly assessment of the economy.

But, in a sign of its gradual shift toward policy tightening, the government omitted a stock phrase used in its assessments last year that the economic recovery was not yet on a solid footing.

Instead, it said that the economy faced a range of problems and took direct aim at the property sector.

PROPERTY WORRIES

“Some factors that are pushing up prices have appeared, strengthening inflationary expectations. In particular, the overly fast increase of housing prices in some cities is quite a prominent problem,” the cabinet statement said.

“We will unswervingly curb excessively fast housing price increases,” it said, adding that it would also work to stabilize the overall prices level.

Qu Hongbin, chief China economist at HSBC, said the stronger-than-expected GDP growth pointed to a build-up of broad-based price pressures, even if inflation fell in March.

“This calls for more decisive steps toward policy tightening over the coming months,” he said.

Higher bank reserve requirements, interest rate increases, a stronger exchange rate and restrictions on infrastructure spending could all form part of the policy menu, Qu added.

Property inflation quickened to 11.7 percent in the year to March from February’s 10.7 percent reading, according to the government’s official gauge, which likely understates the extent of price rises.

The cabinet pledged to maintain the appropriately loose monetary policy and active fiscal policy first implemented at the height of the global financial crisis in late 2008.

Although the official description of policy has not been changed, Beijing has, in practice, reined in its ultra-loose, pro-growth measures.

In its clearest move to normalize policy, it has guided the country’s banks to lend less. Banks issued 2.6 trillion yuan ($381 billion) in net new local-currency loans in the first quarter, 40 percent less than in the same period last year.

The focus of the appropriately loose monetary policy has shifted to “appropriately” from “loose,” Hu Xiaolian, a central bank vice governor, said last month.

FINANCIAL RISKS

The cabinet also noted that potential financial risks should not be overlooked, vowing to strengthen its management over local government financing.

Economists have pointed to debt incurred by local governments as a growing risk to Chinese public finances. Estimates of the amount of their debt vary, with most centering around 6 trillion yuan, roughly 20 percent of GDP.

Provinces, cities and towns have circumvented restrictions on their own borrowing by obtaining financing through investment subsidiaries, making it difficult to gauge the full extent of local government debt.

The cabinet statement did not make any mention of the yuan or exchange rate policy.

U.S. President Barack Obama said on Tuesday that China had yet to set a timetable for reforming the yuan despite “frank” conversations he had had with President Hu Jintao, and a Chinese spokesman said Beijing would not bow to foreign pressure on currency reform.

The GDP and inflation numbers heard by Reuters matched those reported earlier on Wednesday by China Business News, a Chinese-language newspaper which cited an unidentified source.

($1=6.825 Yuan)

(Reporting by Beijing News Room; editing by Stephen Nisbet)

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HK stocks at 3-month high, China property shares weak

April 13, 2010 By Leave a Comment

HONG KONG/SHANGHAI, April 12 (Reuters) – Hong Kong stocks
rose 0.16 percent by midday on Monday to a three-month high as
a giant emergency aid plan for Greece helped boost shares of
Europe’s biggest bank HSBC (0005.HK).

China’s main stock index lost 0.57 percent by midday on
Monday, pressured by a tumble in the property sector after the
country’s top banking regulator ordered banks to take fresh
steps to rein in risky lending to land developers.
[ID:nSGE63B00N]

In Hong Kong, the benchmark Hang Seng Index .HSI gained
34 points to 22,243. The China Enterprise Index .HSCE of top
locally listed mainland stocks was down 0.19 percent.

Market turnover stood at HK$39.9 billion ($5.2 billion)
from midday Friday’s HK$42.65 billion.

“The Greek rescue plan will help HSBC, which still has many
operations in Europe,” said Francis Lun, general manager at
Fulbright Securities. “The U.S. is also showing further signs
of a recovery, so that’s helping sentiment, although I expect
profit taking pressure to come on soon.”

The Hang Seng’s relative strength index (RSI) treaded close
to the overbought level of 70 for the first time in over eight
months, raising concern that the index may not remain above the
22,000 that investors consider a strong resistance.

The IMF and the euro zone threw debt-laden Greece a
lifeline over the weekend by pledging at least 40 billion euros
($54 billion) in aid, although Athens has yet to activate it.
[ID:nLDE63A0BO]

HSBC was the morning’s biggest positive influence on the
big board, adding some 31 points to the Hang Seng Index. Shares
of the market heavyweight were up 0.98 percent to a one-month
intraday high.

A slew of Chinese economic data due later this week could
support the case for a global economic rebound, helping boost
Chinese plays such as ICBC (1398.HK) and Bank of China
(3988.HK).

“Chinese banks still look cheap compared to their peaks,”
said Fulbright’s Lun, who estimates an average upside of about
10 percent for most Chinese banks. “Right now, most are trading
at a book value of about two times, which is about reasonable.”

SHANGHAI SLIPS ON PROPERTY WOES

The Shanghai Composite Index .SSEC was down 0.76 percent
at 3121.55, extending last week’s modest 0.4 percent drop amid
continuing signs that the authorities are clamping down on
asset prices, in particular property prices.

The Shanghai property index .SSEP slumped 2.80 percent.

Real estate companies, prominent among the market’s large
caps, fuelled a 0.87 percent drop in the CSI300 Index
.CSI300, which covers the 300 largest companies by daily
turnover and market capitalisation on the Shanghai and Shenzhen
stock exchanges.

Top housing builder China State Construction Engineering Co
(601668.SS) was the Shanghai market’s most actively traded
stock, dropping 0.93 percent. The second-biggest builder, China
Vanke (000002.SZ), was Shenzhen’s most active stock, falling
2.02 percent.

“Few investors expect they can make profits in property
counters in the near term, and many simply exited the sector,”
said a Chinese fund manager based in Shenzhen, who could not be
quoted by name as he was not authorised to talk to the media
about stocks.

Despite the morning’s fall, traders said the index was
still likely to move around the key 125-day moving average, now
at 3,119 points, and to continue a general trend of range-bound
trading seen so far this year as the market is supported by
China’s strong economy and subsequent robust corporate
earnings.

Bucking the market’s downtrend, paper producer Zhejiang Kan
Specialities Material Co 002012.SZ surged to its 10 percent
daily limit to become the top gainer after it forecast a
sevenfold increase in first-quarter earnings.

Monday morning’s Shanghai A-share turnover jumped to 91
billion yuan ($13 billion) from Friday morning’s 66 billion as
a divided market sparked lots to-and-fro trading. Falling
Shanghai stocks outnumbered fallers by 465 to 408.

Small-cap real estate firm Sunshine City Group Co
000671.SZ was the morning’s biggest laggard, plunging 7.01
percent in line with overall weakness in the sector

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Rate rises pressure services sector

April 8, 2010 By Leave a Comment

The Australian Industry Group says the Reserve Bank’s interest rate rises are hurting the services industry, with consumers becoming more cautious about spending.

The latest Performance of Services Index by the Ai Group and the Commonwealth Bank shows a rise of just 0.1 points last month.

At a reading of 48.4, the index is below the key 50-point level that separates expansion from contraction.

There were further falls in sales, new orders and deliveries in March and consumer-based sectors, like accommodation, cafes, restaurants and retail trade were particularly weak.

The survey’s employment sub-index rose one point to 48.9 in March, indicating the pace of decline in jobs eased somewhat during the month.

Ai Group chief executive Heather Ridout says the Reserve Bank’s five interest rate rises since October have taken a toll.

“The sluggish performance of the consumer-related sub-sectors illustrates a degree of caution on the part of households, strongly influenced by interest rate increases and the anticipation of further rises,” she said.

John Peters, a senior economist with the Commonwealth Bank, agrees that households are starting to struggle with higher mortgage repayments.

“The rate hikes combined with the fade-out of the Government’s short-term fiscal stimulus targeted at consumers has had some negative impact on consumer-related services sector activity in early 2010,” he said.

However both Mr Peters and Ms Ridout pointed out there were some better signs emerging from key business-related sectors.

“There is some encouraging news with the rebound in property and business services activity, reflecting recent strength in the housing market,” Ms Ridout said.

Mr Peters says the recovering property sector and ongoing federal and state government infrastructure spending is offering important support.

But Ms Ridout says overall, the March result represents the third straight month of contraction in the services industry.

“It continues a disappointing opening quarter to the year and reinforces our view that the recovery is yet to gain full traction across the economy,” she said.

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