Sunday, July 12, 2009

Hong Kong Shares Slide 2.1 Pct, China Shares Declined for Second Day

. Sunday, July 12, 2009

By stockOzone team

Hong Kong shares fell sharply on Monday, hounded by speculation over a likely tightening of China's loose monetary policies, while stocks in Shanghai drifted lower on news of an impending massive new listing.

China Eastern Airlines (600115.SS) and Shanghai Airlines (600591.SS) jumped their 5 percent daily limits in Shanghai after China Eastern said it would acquire its smaller rival in a share swap worth 9 billion yuan ($1.3 billion), which would give the newly capitalised airline more than a 50 percent market share in China's financial hub.

China Eastern's Hong Kong-listed shares (0670.HK) rose as much as 14.4 percent in early trade to an 11-month high. The H-shares later pared gains, but were still up 5.2 percent at HK$1.83.

Here are the index moves and top stocks on the move by midday:


* The benchmark Hang Seng Index .HSI was down 2.1 percent at 17,343.71 led by Chinese bank stocks, while turnover languished at HK$27.9 billion.

* "Possible austerity measures from Beijing are a big concern for the market. There are those who believe the stimulus measures have created a bubble," said Linus Yip, strategist with First Shanghai Securities.

* The China Enterprises Index .HSCE, which represents top locally listed mainland Chinese stocks, had fallen 2.1 percent to 10,351.26.

* New listing Chigo Holdings (0449.HK), rose 26 percent in its debut trading session, but trimmed early sharp gains as the sell down in the broad market weighed.

The stock had risen to an early high of HK$3.12, a 37.4 percent increase over its issue price of HK$2.27. The retail portion of the HK$120.7 million issue by air-conditioning products manufacturer was 347 times oversubscribed.

* Carmaker Dongfeng Group (0489.HK) rose 3.2 percent, extending last week's gains, after June passenger car sales in China shot up 47.7 percent from a year earlier amid government stimulus measures to fuel consumption.

* China Unicom (0762.HK), which soared 7.6 percent last week on speculation the country's second-largest mobile services provider was close to a deal with Apple APPL.O to launch its iPhone in China, tanked on Monday as no details on the rumoured deal were forthcoming.

The stock was down 5.9 percent at HK$10.14.

* China Aoyuan Property (3883.HK) dropped after it said it would raise over HK$600 million through a share sale to its controlling shareholder to fund acquisitions and for working capital.

The stock was down 13.2 percent at HK$1.71, while the placement was priced at HK$1.73.


* The Shanghai Composite Index .SSEC ended the morning down 0.27 percent at 3,105.640 after China State Construction launched an intitial public offering (IPO) worth about $5.9 billion, the biggest since the goverment allowed listings to resume earlier this month.

* Gaining Shanghai A shares outnumbered losers by 664 to 243, while turnover for Shanghai A shares slipped to 84.7 billion yuan ($12.4 billion) from Friday morning's 93.3 billion yuan.

* China State Construction Engineering Corp will begin book-building on Tuesday in what will be the country's fifth-biggest stock IPO.

* Two new IPOs doubled on their debut on Friday, which some analysts said may have prompted China State Construction to push up its IPO.

* Despite the raft of new shares hitting the market, the Shanghai Composite has proved resilient. Analysts said this week's economic figures for the first half of 2009 were expected to be upbeat and could give the index a further boost.

* "There is no big difference between CSCEC announcing its IPO this month or next month as both the two newly listed stocks and the Shanghai Composite have stayed firm," said Huatai Securities analyst Li Wenhui.

* The China Securities Regulatory Commission said it would resume share listings after a 10-month hiatus, reviewing two companies initially. A flood of new share supply is expected, but ample liquidity is helping the market absorb the IPOs.

* The official China Securities Journal reported that China Asset Management Co has raised nearly 25 billion yuan in a newly launched index fund, the biggest amount raised so far this year for a new fund.

* Following the IPO pricings on Friday, shares of the companies were mixed after sliding by the 10 percent daily limit in early trade. Guilin Sanjin Pharmaceutical (002275.SZ) lost 3.64 percent to 34.70 yuan after soaring 82 percent on Friday. Zhejiang Wanma Cable (002276.SZ) rose 2.39 percent to 26.55 yuan after surging 125 percent on Friday.

* Wuliangye Yibin (000858.SZ), a maker of traditional Chinese spirits, or "baijiu", raced up by its 10 percent daily limit to 22.69 yuan after saying it would set up a sales venture with its parent, a move that analysts said could boost earnings.

Disclosure: Author does not own any of the stocks discussed here.

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