SHANGHAI, Dec 13 (Reuters) - China’s main stock index fell on Thursday as bank and real estate shares continued a slide that began this week because of tightening monetary policy.
The Shanghai Composite Index ended the morning down 0.91 percent at 5,049.315 points, after hitting a low of 5,046.685. It dropped 1.54 percent on Wednesday.
Losing Shanghai A shares outnumbered gainers by 451 to 372, while turnover in Shanghai A shares shrank to 50.9 billion yuan ($6.9 billion) from Wednesday morning’s 61.9 billion.
Wednesday’s fall probably marked the end of a two-week rebound from the three-month low of 4,778.727 hit in late November, and the index may well drop back below 5,000 points, analysts believe.
Banks and property shares began slipping on Monday after the central bank announced a large reserve ratio hike at the weekend in an effort to curb loan growth. Tuesday’s announcement that November inflation was an 11-year high added to the jitters.
“Investors are worrying about the possibility of a hike in interest rates this weekend, so blue chips may stay soft for some days,” said Xu Yinhui, analyst at Guotai Junan Securities.
China Shipping Container Lines slid 3.37 percent to 11.18 yuan on profit-taking after its strong debut in Shanghai on Wednesday, when it soared 75 percent from its IPO price.
China Industrial Output Grows at Slowest Pace of 2007
Dec. 13 (Bloomberg) -- China’s industrial production grew at the slowest pace this year, suggesting weaker export growth and government curbs on lending are starting to cool the world’s fastest-growing major economy.
Output rose 17.3 percent in November from a year earlier, the statistics bureau said today, after gaining 17.9 percent in October. That was less than the 18 percent median estimate of 21 economists surveyed by Bloomberg News.
Weaker global growth may further curb overseas shipments after the government this year reduced tax incentives for exporters. China has cracked down on bank lending to try to prevent the economy from overheating after inflation jumped to an 11-year high in November.
“Firms have scaled back production to avoid a quick build- up of inventories as they expect export growth to slow,” said Sun Mingchun, an economist at Lehman Brothers Holdings Inc. in Hong Kong. “Monetary tightening has added credit constraints on company expansion.”
Output of steel products rose 12.7 percent in November from a year earlier after gaining 17 percent in October. Raw steel increased 4.3 percent, slowing from 13.5 percent.
Textile output rose 14.3 percent, down from 15.3 percent. Vehicle production grew 21.7 percent, slowing from 24.3 percent.
Weaker U.S. Demand
For the first 11 months, industrial production rose 18.5 percent from a year earlier, the National Bureau of Statistics said. That compared with the 16.6 percent pace in all of 2006.
Export growth slowed to 22.6 percent for the past four months from the 29 percent pace through July because of cuts to export rebates, weaker U.S. demand, and higher prices due to currency gains and production costs.
Shipments to the U.S. rose 15.1 percent in the first 11 months from a year earlier, down from 18 percent through July.
China’s economic growth is likely to slow to 10.5 percent in 2008 from 11.4 percent this year on tightening measures, the Asian Development Bank said today. The Organization for Economic Co-operation and Development forecasts a decline to a 10.7 percent pace on reduced demand for exports.
Inflation accelerated to 6.9 percent in November and the trade surplus pumped $26.3 billion into the economy. The government this month named inflation and overheating as the biggest threats to growth in 2008.
Lending Crackdown
China last week announced the largest increase since 2004 in the proportion of deposits that lenders must hold as reserves, a 1 percentage point jump to 14.5 percent. The People’s Bank of China has raised interest rates five times this year, pushing the one-year lending rate to a nine-year high of 7.29 percent.
The government this week said state-owned companies will be required to pay dividends of as much as 10 percent next year, a curb on growth in fixed-asset investment that the State Council, or cabinet, describes as “too rapid” and a “prominent problem.” The nation is at risk of industrial overcapacity.
Factory and property spending in urban areas probably rose 26.6 percent in the first 11 months of 2007 from a year earlier, a Bloomberg News survey showed. That would be down from the 26.9 percent pace through October, another sign that cooling measures may be starting to have an effect.
Hong Kong Submits Proposal for China-H.K. Stock Plan
Dec. 13 (Bloomberg) -- Hong Kong has submitted a proposal to the Chinese cabinet for mainland individuals to buy shares directly on the city’s stock market, paving the way for a pilot program that has been plagued by repeated delays.
The program will be introduced after the proposal’s approval, Hong Kong Monetary Authority Chief Executive Joseph Yam said today. There is no timeline yet, he said, speaking at a press briefing on the sidelines of a conference in Beijing.
China on Aug. 20 said mainland individuals will be able to buy Hong Kong equities directly for the first time through an initiative known as the ‘‘through train.’’ Hong Kong’s Hang Seng Index has surged 31 percent since then, prompting China’s Premier Wen Jiabao to say on Nov. 3 that the government needed more time to assess the risks to the city’s financial system.
‘‘The through-train program poses risks for the stock market, and investor interests must also be protected,’’ Yam said today. ‘‘These are risks that can be managed, and managed effectively.’’
China may impose an investment ceiling of $30 billion on the full pilot program, Credit Suisse Group said in a Nov. 12 report.
Conditions for Chinese individuals to invest directly in Hong Kong stocks should be arranged as soon as possible, Yam said.
‘‘China needs more domestic funds to flow overseas in order to seek higher returns,’’ Yam said. ‘‘But opening the capital account will not be simple and will require coordination between foreign exchange regulators. I hope to see these issues smoothed out as soon as possible.’’
Bank Products
Hong Kong stocks fell to a one-month low on Nov. 12 after the Credit Suisse report said the through-train program will be delayed until the second quarter of 2008.
‘‘Banks must offer more equities-related products as clients take their money out of deposits and into the stock market,’’ Li Fuan, who oversees product innovation at the China Banking Regulatory Commission, said at a conference in Beijing today, adding that the regulator is ‘‘enthusiastically preparing’’ for the through-train program.
Banks in China sold about $1 billion of products linked to the so-called qualified domestic institutional investor program as of the end of October, the regulator said in presentation materials distributed at the conference earlier today. Chinese banks sold $317 million of QDII products and foreign banks sold $695 million.
‘‘The CBRC isn’t against individuals directly investing abroad,’’ Li said. ‘‘But many Chinese investors are inexperienced with overseas markets and should go through the QDII program to reap the knowledge of institutional investors.’’
In the Details
Delays in starting the pilot program highlight conflicting goals among China’s financial regulators, as the government tries to ease pressure on the yuan to rise while seeking to avoid a fund exodus that might trigger a stock market slump.
The yuan today rose to the highest since a fixed exchange rate to the dollar ended in 2005 after officials told U.S. Treasury Secretary Henry Paulson they support currency appreciation as long as it isn’t excessive. The benchmark CSI 300 Index has more than doubled this year, making it the best stock market among the 90 tracked by Bloomberg worldwide.
There has also been speculation about the amount of Chinese funds that will be allowed to flow out through the program. The government will cap investments allowed under the pilot program, Xia Lingwu, a Beijing-based spokesman at China’s banking watchdog, said on Sept. 21 without elaborating.
According to the Aug. 20 announcement, Chinese nationals with a Bank of China Ltd. account in Tianjin will be allowed to buy Hong Kong equities.
China also needs to boost cross-border securities transactions and cooperation between financial intermediaries, Yam said.
The Chinese government welcomes international agencies and private companies to sell yuan bonds in China, central bank deputy governor Wu Xiaoling told the same conference. China also plans to introduce credit derivatives, she said.
4 comments:
China Stocks Drop as Banks, Property Keep Falling
SHANGHAI, Dec 13 (Reuters) - China’s main stock index fell on Thursday as bank and real estate shares continued a slide that began this week because of tightening monetary policy.
The Shanghai Composite Index ended the morning down 0.91 percent at 5,049.315 points, after hitting a low of 5,046.685. It dropped 1.54 percent on Wednesday.
Losing Shanghai A shares outnumbered gainers by 451 to 372, while turnover in Shanghai A shares shrank to 50.9 billion yuan ($6.9 billion) from Wednesday morning’s 61.9 billion.
Wednesday’s fall probably marked the end of a two-week rebound from the three-month low of 4,778.727 hit in late November, and the index may well drop back below 5,000 points, analysts believe.
Banks and property shares began slipping on Monday after the central bank announced a large reserve ratio hike at the weekend in an effort to curb loan growth. Tuesday’s announcement that November inflation was an 11-year high added to the jitters.
“Investors are worrying about the possibility of a hike in interest rates this weekend, so blue chips may stay soft for some days,” said Xu Yinhui, analyst at Guotai Junan Securities.
China Shipping Container Lines slid 3.37 percent to 11.18 yuan on profit-taking after its strong debut in Shanghai on Wednesday, when it soared 75 percent from its IPO price.
China Industrial Output Grows at Slowest Pace of 2007
Dec. 13 (Bloomberg) -- China’s industrial production grew at the slowest pace this year, suggesting weaker export growth and government curbs on lending are starting to cool the world’s fastest-growing major economy.
Output rose 17.3 percent in November from a year earlier, the statistics bureau said today, after gaining 17.9 percent in October. That was less than the 18 percent median estimate of 21 economists surveyed by Bloomberg News.
Weaker global growth may further curb overseas shipments after the government this year reduced tax incentives for exporters. China has cracked down on bank lending to try to prevent the economy from overheating after inflation jumped to an 11-year high in November.
“Firms have scaled back production to avoid a quick build- up of inventories as they expect export growth to slow,” said Sun Mingchun, an economist at Lehman Brothers Holdings Inc. in Hong Kong. “Monetary tightening has added credit constraints on company expansion.”
Output of steel products rose 12.7 percent in November from a year earlier after gaining 17 percent in October. Raw steel increased 4.3 percent, slowing from 13.5 percent.
Textile output rose 14.3 percent, down from 15.3 percent. Vehicle production grew 21.7 percent, slowing from 24.3 percent.
Weaker U.S. Demand
For the first 11 months, industrial production rose 18.5 percent from a year earlier, the National Bureau of Statistics said. That compared with the 16.6 percent pace in all of 2006.
Export growth slowed to 22.6 percent for the past four months from the 29 percent pace through July because of cuts to export rebates, weaker U.S. demand, and higher prices due to currency gains and production costs.
Shipments to the U.S. rose 15.1 percent in the first 11 months from a year earlier, down from 18 percent through July.
China’s economic growth is likely to slow to 10.5 percent in 2008 from 11.4 percent this year on tightening measures, the Asian Development Bank said today. The Organization for Economic Co-operation and Development forecasts a decline to a 10.7 percent pace on reduced demand for exports.
Inflation accelerated to 6.9 percent in November and the trade surplus pumped $26.3 billion into the economy. The government this month named inflation and overheating as the biggest threats to growth in 2008.
Lending Crackdown
China last week announced the largest increase since 2004 in the proportion of deposits that lenders must hold as reserves, a 1 percentage point jump to 14.5 percent. The People’s Bank of China has raised interest rates five times this year, pushing the one-year lending rate to a nine-year high of 7.29 percent.
The government this week said state-owned companies will be required to pay dividends of as much as 10 percent next year, a curb on growth in fixed-asset investment that the State Council, or cabinet, describes as “too rapid” and a “prominent problem.” The nation is at risk of industrial overcapacity.
Factory and property spending in urban areas probably rose 26.6 percent in the first 11 months of 2007 from a year earlier, a Bloomberg News survey showed. That would be down from the 26.9 percent pace through October, another sign that cooling measures may be starting to have an effect.
Hong Kong Submits Proposal for China-H.K. Stock Plan
Dec. 13 (Bloomberg) -- Hong Kong has submitted a proposal to the Chinese cabinet for mainland individuals to buy shares directly on the city’s stock market, paving the way for a pilot program that has been plagued by repeated delays.
The program will be introduced after the proposal’s approval, Hong Kong Monetary Authority Chief Executive Joseph Yam said today. There is no timeline yet, he said, speaking at a press briefing on the sidelines of a conference in Beijing.
China on Aug. 20 said mainland individuals will be able to buy Hong Kong equities directly for the first time through an initiative known as the ‘‘through train.’’ Hong Kong’s Hang Seng Index has surged 31 percent since then, prompting China’s Premier Wen Jiabao to say on Nov. 3 that the government needed more time to assess the risks to the city’s financial system.
‘‘The through-train program poses risks for the stock market, and investor interests must also be protected,’’ Yam said today. ‘‘These are risks that can be managed, and managed effectively.’’
China may impose an investment ceiling of $30 billion on the full pilot program, Credit Suisse Group said in a Nov. 12 report.
Conditions for Chinese individuals to invest directly in Hong Kong stocks should be arranged as soon as possible, Yam said.
‘‘China needs more domestic funds to flow overseas in order to seek higher returns,’’ Yam said. ‘‘But opening the capital account will not be simple and will require coordination between foreign exchange regulators. I hope to see these issues smoothed out as soon as possible.’’
Bank Products
Hong Kong stocks fell to a one-month low on Nov. 12 after the Credit Suisse report said the through-train program will be delayed until the second quarter of 2008.
‘‘Banks must offer more equities-related products as clients take their money out of deposits and into the stock market,’’ Li Fuan, who oversees product innovation at the China Banking Regulatory Commission, said at a conference in Beijing today, adding that the regulator is ‘‘enthusiastically preparing’’ for the through-train program.
Banks in China sold about $1 billion of products linked to the so-called qualified domestic institutional investor program as of the end of October, the regulator said in presentation materials distributed at the conference earlier today. Chinese banks sold $317 million of QDII products and foreign banks sold $695 million.
‘‘The CBRC isn’t against individuals directly investing abroad,’’ Li said. ‘‘But many Chinese investors are inexperienced with overseas markets and should go through the QDII program to reap the knowledge of institutional investors.’’
In the Details
Delays in starting the pilot program highlight conflicting goals among China’s financial regulators, as the government tries to ease pressure on the yuan to rise while seeking to avoid a fund exodus that might trigger a stock market slump.
The yuan today rose to the highest since a fixed exchange rate to the dollar ended in 2005 after officials told U.S. Treasury Secretary Henry Paulson they support currency appreciation as long as it isn’t excessive. The benchmark CSI 300 Index has more than doubled this year, making it the best stock market among the 90 tracked by Bloomberg worldwide.
There has also been speculation about the amount of Chinese funds that will be allowed to flow out through the program. The government will cap investments allowed under the pilot program, Xia Lingwu, a Beijing-based spokesman at China’s banking watchdog, said on Sept. 21 without elaborating.
According to the Aug. 20 announcement, Chinese nationals with a Bank of China Ltd. account in Tianjin will be allowed to buy Hong Kong equities.
China also needs to boost cross-border securities transactions and cooperation between financial intermediaries, Yam said.
The Chinese government welcomes international agencies and private companies to sell yuan bonds in China, central bank deputy governor Wu Xiaoling told the same conference. China also plans to introduce credit derivatives, she said.
The Chinese government says; yao zhong dian da ji di chan!
Post a Comment