China, HK stocks drop on supply woes, banks weigh
Wednesday, 9 December 2009
HONG KONG/SHANGHAI, Dec 8 (Reuters): Shares in China and Hong Kong declined Tuesday, with banks leading losses, on concern over more share issues and comments suggesting mainland banks may not receive government help to boost their capital.
The Shanghai Composite Index ended down 1.06 per cent or 35.233 points at 3,296.664 points.
Losing Shanghai A shares outnumbered gainers by 575 to 313, while turnover dropped to a one-week low of 162 billion yuan ($23.72 billion) from Monday's 171 billion yuan.
Banks fell, with Industrial and Commercial Bank of China (ICBC) (601398.SS) sinking 1.49 per cent to 5.30 yuan.
In Hong Kong, ICBC (1398.HK) was down 1.81 per cent and China Construction Bank (0939.HK) shed 2.11 per cent.
"The index is expected to remain rangebound in coming days, supported by steady economic policy, but weighed down by new share supply and possible fundraising by banks," said Zhang Qi, senior analyst at Haitong Securities in Shanghai.
The official Securities Times quoted a senior official at Central Huijin, an arm of Beijing's sovereign wealth fund, as saying that it would not reinject dividends it receives from
China's four biggest state-owned banks to ease pressure on them to raise funds.
Chinese banks are expected to turn to capital markets to raise funds and replenish capital after a lending spree in the first half of the year spurred worries about rising risk.
Market talk early this month suggested that Huijin, a major shareholder in the big banks, might aid them by reinjecting dividend payments.
"The index was weighed down by worries over fundraising in the banking sector, although the timetable, form and size of any fundraising remains unclear," said Li Wenhui, senior analyst at Huatai Securities in Nanjing.
Prospects for new share supplies from initial public offerings also soured sentiment. The Securities Times said eight companies aiming to list on the ChiNext would launch subscriptions for IPOs next week.
The consumer sector outperformed after the government sent a clear signal that it would make a major effort to boost domestic consumption next year.
Beijing Xidan Department Store (600723.SS) advanced 5.14 per cent to 11.24 yuan while home appliance maker Hefei Meiling (000521.SZ) jumped 9.17 per cent to 12.50 yuan. SAIC Motor (600104.SS), China's top vehicle producer, edged up 0.27 per cent to 25.76 yuan after saying it sold 252,190 vehicles in November, up 91 per cent from a year earlier, helped by government stimulus schemes that boosted consumption of domestic products including cars.
The benchmark Hang Seng Index was down 1.18 per cent or 264.44 points at 22,060.52. Turnover rose to HK$68.5 billion ($8.8 billion) from Monday's HK$60.9 billion.
The China Enterprises Index of top locally listed mainland Chinese stocks was down 1.54 per cent at 13,152.10.
"People are a bit wary about committing funds as the end of the year approaches," said Howard Gorges, vice-chairman at South China Financial Holdings. "It will get quieter until the end of the month.
The market remains cautious. Some investors feel that US interest rates may go up sooner than expected, so the market will remain under consolidation until the end of the year."
The Federal Reserve would probably start raising rates by the middle of 2010, Gorges said.
The Shanghai Composite Index ended down 1.06 per cent or 35.233 points at 3,296.664 points.
Losing Shanghai A shares outnumbered gainers by 575 to 313, while turnover dropped to a one-week low of 162 billion yuan ($23.72 billion) from Monday's 171 billion yuan.
Banks fell, with Industrial and Commercial Bank of China (ICBC) (601398.SS) sinking 1.49 per cent to 5.30 yuan.
In Hong Kong, ICBC (1398.HK) was down 1.81 per cent and China Construction Bank (0939.HK) shed 2.11 per cent.
"The index is expected to remain rangebound in coming days, supported by steady economic policy, but weighed down by new share supply and possible fundraising by banks," said Zhang Qi, senior analyst at Haitong Securities in Shanghai.
The official Securities Times quoted a senior official at Central Huijin, an arm of Beijing's sovereign wealth fund, as saying that it would not reinject dividends it receives from
China's four biggest state-owned banks to ease pressure on them to raise funds.
Chinese banks are expected to turn to capital markets to raise funds and replenish capital after a lending spree in the first half of the year spurred worries about rising risk.
Market talk early this month suggested that Huijin, a major shareholder in the big banks, might aid them by reinjecting dividend payments.
"The index was weighed down by worries over fundraising in the banking sector, although the timetable, form and size of any fundraising remains unclear," said Li Wenhui, senior analyst at Huatai Securities in Nanjing.
Prospects for new share supplies from initial public offerings also soured sentiment. The Securities Times said eight companies aiming to list on the ChiNext would launch subscriptions for IPOs next week.
The consumer sector outperformed after the government sent a clear signal that it would make a major effort to boost domestic consumption next year.
Beijing Xidan Department Store (600723.SS) advanced 5.14 per cent to 11.24 yuan while home appliance maker Hefei Meiling (000521.SZ) jumped 9.17 per cent to 12.50 yuan. SAIC Motor (600104.SS), China's top vehicle producer, edged up 0.27 per cent to 25.76 yuan after saying it sold 252,190 vehicles in November, up 91 per cent from a year earlier, helped by government stimulus schemes that boosted consumption of domestic products including cars.
The benchmark Hang Seng Index was down 1.18 per cent or 264.44 points at 22,060.52. Turnover rose to HK$68.5 billion ($8.8 billion) from Monday's HK$60.9 billion.
The China Enterprises Index of top locally listed mainland Chinese stocks was down 1.54 per cent at 13,152.10.
"People are a bit wary about committing funds as the end of the year approaches," said Howard Gorges, vice-chairman at South China Financial Holdings. "It will get quieter until the end of the month.
The market remains cautious. Some investors feel that US interest rates may go up sooner than expected, so the market will remain under consolidation until the end of the year."
The Federal Reserve would probably start raising rates by the middle of 2010, Gorges said.