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Bank of China, HSBC, China Construction Bank rally, but China mainland markets drop

Published: 05:30 10 Sep 2009 EDT

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Mainland markets dropped for the first time in eight days, led by auto shares, after State development and Reform Comission warned the overcapacity in the industry.

The Shanghai Comprehensive Index dropped 0.73 percent to 2924.88. The SME Comprehensive Idex lost 0.90 percent to 4541.23.

The Hang Seng Index advanced 1.05 percent to 21069.56. The China Enterprise Index, which represents large mainland companies listed in Hong Kong, gained 0.92 percent to 10279.65.

Taiwan stocks rose 1.1 percent to a 13-month high after an official said Taiwan is aiming to sign the financial memorandum of understanding with mainland China before the end of the year.

Banks made the biggest gains in Hong Kong. Bank of China (HK:3988),  rose 4.3 percent to a 26-month high of HK$4.33. Industrial & Commercial Bank of China (HK:1398) was up 2.9 percent. China Construction Bank (HK:0939) finished 2.1 percent higher while HSBC (HK:0005) advanced 1.8 percent.

 

Auto shares drop on overcapacity concerns

Mainland-listed auto shares dropped 3.2 percent on average and the State Development and Reform Comission warned about  the forthcoming overcapacity of the industry. The People's Daily said yesterday that overcapcity will exceed 3 million by 2010. China's auto production and sales both increased over 80 percent year on year.


SAIC (SH:600104),China's largest car producer, declined 4.22 percent after having rallied 23.75 percent in the last 7 trading days. Anhui Jianghuai Automobile Co.(SH:600418) lost 3.47 percent after announcing a large share holder's reduction in the company's stake.

Geely Automobile Holdings (HK:0175) declined 1.90 percent. Great Wall Motor Co.(HK:2333) lost 2.94 percent.

 

China to support outsourcing firms

China CAMC Engineering Co.(SZ:002051), a construction outsourcing company, surged to the 10 percent trading cap today after Beijing announced it would support the financing of outsourcing companies. The Chinese government has pledged more aid from the country's financial institutions to boost its outsourcing industry, a circular on the website of the country's central bank said yesterday.

The circular asked banks to develop more policies and credit products tailored to the outsourcing business. Outsourcing companies were encouraged to list in equity markets both at home and abroad to raise fund to increase their competitiveness.

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