Quick outlook for Chinese ADR trading today. What we knew before, that Lehman's drag on the DJIA will have significant impact on Hong Kong and Asian trading, came as no surprise. As the saying goes " if the U.S. sneezes the world catches a cold" proved to hold true again. Hong Kong listed Chinese shares, H-shares, were on retreat as a result.
The good news is that Shanghai listed Chinese shares, a market that is largely closed for global equity funds, was less effected by U.S. sentiment but rather took refuge in lower oil and high trade surplus news. Sinopec (SNP), Asia's largest refiner gained 1.34% in Shanghai (SHA:600028) while it fell 3.58% in Hong Kong (HKG:0386).
Chinese Airliners are seen as the winners of falling oil. China's largest airline by fleet size, China Southern Airlines (ZNH) gained 2.35% in Hong Kong.
On the domestic front the good news is that China's economy seems to be on a good track overall. Inflation is down to 4.9% from 7.8 three months ago and trade surplus is widening. On the negative side of the news factory output slowed in August, a sign that global economic slow down took a toll on Chinese manufacturers, to.
For additional coverage, find news below.
China inflation drops, trade surplus hits record
BEIJING, Sept 10 (Reuters) - China's consumer inflation fell in August to a 14-month low of 4.9 percent, giving policy makers more room to pump up the world's fourth-largest economy if growth slows abruptly in coming months. Markets, which had expected inflation to drop to 5.3 percent from 6.3 percent in the year to July, cheered the news. Shanghai stocks recouped early losses of 1.5 percent and closed 0.23 percent higher on hopes that the central bank would ease its tight monetary stance. "With these numbers we move much closer to the time when Beijing decides inflation is not an issue any more," said Stephen Green, head of China research at Standard Chartered Bank in Shanghai. "There are increasing noises that this tightening policy has lasted too long, and more and more worries about growth skidding seriously." Reuters
China August industry output slows sharply-sources
BEIJING, Sept 10 - China's industrial output growth slowed to a six-year low of less than 13 percent in the year to August from July's reading of 14.7 percent, HSBC and a government researcher said on Wednesday. The figures are due for release on Friday at 0200 GMT. Economists polled by Reuters had expected growth of 14.5 percent [ID:nPEK183054]. Temporary factory closures to help improve Beijing's air quality during the Olympics were partly responsible for reducing output growth to below 13 percent, HSBC economist Qu Hongbin said in a note to clients. The report did not say where the information came from. A government researcher, who declined to be identified, put the figure at 12.8 percent. That would be the slowest growth rate since Aug. 2002 -- excluding the months of January and February, when factory closures for the Lunar New Year make output statistics volatile Reuters
China shares rise on lower inflation rate
SHANGHAI, China - Chinese shares rose Wednesday after the government reported lower-than-expected inflation. The benchmark Shanghai Composite Index <.SSEC> closed up 0.23 percent, or 4.98 points, at 2150.76. The Shenzhen's B-share index <.SZSB> for China's smaller second market added 0.47 percent to 588.31. China's inflation rate eased to 4.9 percent in August, which was the lowest in 14 months, the government reported. Analysts said that eased concerns Beijing would take new steps to cool inflation, which could reduce economic growth. Tourism stocks led the gainers on expectations the upcoming Chinese mid-autumn festival and "golden week" holidays around the Oct. 1 national day would boost travel. Beijing Capital Tourism Ltd. surged by the daily limit of 10 percent to 12.01 yuan. China CYTS Tours Holding Co., Ltd. soared 8.22 percent to 8.82 yuan. Airlines, whose operations are sensitive to falls in fuel prices, rose as oil prices dropped. Oil price fell to $103.72 per barrel in trading on the New York Mercantile Exchange. China Southern Airlines (600029.SS: Quote, Profile , Research)(1055.HK: Quote, Profile , Research)(ZNH: Quote, Profile , Research) rose 2.32 percent to 3.53 yuan. China Eastern Airlines (600115.SS: Quote Profile Research)(0670.HK: Quote Profile Research)(CEA: Quote Profile Research) climbed 4.58 percent to 4.34 yuan after the Shanghai-based carrier denied rumors that it was involved in possible merger talks with Shanghai Airlines (600591.SS: Quote, Profile , Research). PetroChina (0857.HK: Quote, Profile , Research)(PTR: Quote, Profile, Research)(601857.SS: Quote, Profile , Research) lost 0.81 percent to 11.08 yuan, while Sinopec Corp (0386.HK: Quote, Profile , Research)(SNP: Quote, Profile, Research) (600028.SS: Quote, Profile , Research), Asia's largest oil refiner by volume, gained 1.11 percent to 9.09 yuan. AP
China Telecom approved to sell 20 bln yuan bonds
SHANGHAI, Sept 10 (Reuters) - China Telecom (CHA: Quote, Profile, Research) (0728.HK: Quote, Profile , Research) has won the securities regulator's approval to issue 20 billion yuan ($2.9 billion) in corporate bonds, market sources said on Wednesday. The issuance is part of a plan to float up to 80 billion yuan in bonds to bankroll an acquisition in a sweeping domestic telecoms restructuring. China Telecom, the country's top fixed-line carrier, will pay as much as $8.6 billion to use its parent's newly acquired wireless network for the next three years, as it enters the more lucrative mobile market with the hope of more than doubling its subscriber numbers by 2010, top executives told Reuters in late July. Reuters
China Aug crude imports rise to secure for Olympics
BEIJING, Sept 10 (Reuters) - China's August imports of crude oil recovered from a July slide to stand 11.5 percent higher than a year earlier, as global prices retreated and refiners pumped up processing to ensure Olympic supplies. The world's number two oil consumer shipped in 15.65 million tonnes, or 3.69 million barrels per day (bpd), of crude last month, data from the General Administration of Customs showed on Wednesday. It bought 3.25 million bpd in July, when imports showed their biggest year-on-year decline since January 2005. Chinese imports have been relatively weak for several months, but analysts say this is because refiners took advantage of tax breaks to curb domestic production in favour of buying diesel and gasoline on world markets, not due to slackening end user demand. Some analysts expect crude import growth to pick up pace over the rest of this year as companies including Sinopec Corp (0386.HK: Quote, Profile , Research)(SNP: Quote, Profile, Research) (600028.SS: Quote, Profile , Research), PetroChina (0857.HK: Quote, Profile , Research)(PTR: Quote, Profile, Research)(601857.SS: Quote, Profile , Research) and CNOOC Ltd. (0883.HK: Quote, Profile , Research) (CEO: Quote, Profile , Research) start up new refineries, and importers have already stopped buying motor fuel on the spot market for September. "Imports will at least maintain its pace after less purchases in July when oil prices hit record highs," said Liu Youcheng, an analyst with Hongyuan Securities in Beijing. Reuters
Lower oil, broker downgrades lead HK shares down 2.4 pct
HONG KONG, Sept 10 (Reuters) - Hong Kong's share index dropped 2.4 percent on Wednesday to just off a 17-month low, as falling oil prices walloped commodity-linked stocks and Chinese property shares slumped on more broker downgrades following grim August sales figures. China Overseas Land & Investment Ltd. (0688.HK: Quote, Profile , Research) tumbled 11.5 percent after its sales revenue in August fell 40 percent from July and 28 percent from the same month last year. The benchmark Hang Seng Index <.HSI> closed down 491.33 points at 19,999.78. The index gave up almost all the gains made in Monday's 4.3 percent rally, triggered by the federal takeover of troubled U.S. mortgage giants Freddie Mac (FRE: Quote, Profile , Research) and Fannie Mae (FNM: Quote, Profile, Research), and is just shy of its 17-month closing low of 19,933.28 hit on Sept 5. "The market tumbled following a string of broker downgrades amid hardly any fund flows," said Alex Tang, research director with Core Pacific-Yamaichi International. The China Enterprises index of mainland H shares <.HSCE> of top locally listed mainland Chinese firms fell 3.1 percent. Gold miner Zijin Mining (2899.HK: Quote, Profile , Research) plummeted 9.3 percent to an 18-month low of HK$3.89 after gold prices sank to their weakest in nearly a year as a stronger dollar and lower oil prices triggered a second day of heavy selling. Retreating oil prices also sent Asia's largest oil & gas producer, PetroChina (0857.HK: Quote, Profile , Research)(PTR: Quote, Profile, Research)(601857.SS: Quote, Profile , Research), down 3 percent while offshore oil producer CNOOC Ltd. (0883.HK: Quote, Profile , Research) (CEO: Quote, Profile , Research) dropped 5.4 percent. Reuters
Disappointing Lehman results hit world stocks
LONDON (Reuters) - World stocks fell on Wednesday while safe-haven government bonds and the yen rose after U.S. investment bank Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) disappointed investors with a bigger-than-expected quarterly loss. Lehman, a casualty of the credit crunch, posted a preliminary quarterly loss of $5.92 a share, compared with Reuters Estimates of a loss of $3.43. The bank also said it would spin off its commercial real estate assets into a new, separate public company, adding it is examining all strategic alternatives. Lehman's announcement offered the latest piece of negative news for risky assets. The market correction of the past 12 months has weighed on investor sentiment and threatened to kick major economies into recession. Reuters