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Market:	Hong King, Shanghai
Sector:	General Financial
Epic:	CHINA
News:	Latest news
Web Site:	China News Summary
Other Articles:	30-06-200929-06-200928-06-2009

China auto and steel stocks up as China continues to combat crisis

China's mainland markets rose on the first two trading days of 2009 after the government announced it plans to support the country's flailing steel and automobile industries. Banks were also up led by Citibank-partner Pudong Development Bank Ltd. which rose by 5.5 percent after reporting its 2008 profits were up 128 percent. Industrial & Commercial Bank of China rose 2.8 percent and China Construction Bank gained 2.1 percent to 3.97 yuan.
 
The Shanghai Composite Index rose 6.39 percent. The index had dropped 65.39 percent in the year 2008, making it the 13th worst performer in the world.
 
However the impact of the global credit crunch continues to hit home. There are now 128 companies listed on the mainland exchanges to have announced projected net losses for the 2008. Around half of the companies predicting their first yearly loss blamed the loss to depreciation of inventories. Having purchased raw materials when the price of commodities was high and failing to turn them into products before demand slumped.

In Hong Kong, the Hang Seng Index advanced 8.44 percent over two days, despite the slight retreat of 0.35 percent on Tuesday.

Auto and steel rally

China's Premier Wen Jiabao announced over the weekend that the government has finished plans to support the steel and auto industries.

Great Wall Motor Co. (2333, HK) surged 22.2 percent in the past two days. Nanchang Chang Chongqing Iron & Steel Co. (601005,SH) also advanced 21 percent. Steel production in Tangshan, in China's Hebei province, has risen to more than 70 percent of capacity as companies resumed output, according to figures released in late Decmber. According to local press, 39 of 57 iron and steel factories in Hebei – China's biggest steel-producing province – are operating.

With a foot in both the auto and steel industries, Changli Iron & Steel Co. (600507,SH) – China's biggest producer of car springs – jumped by its 10 percent daily limit for two consecutive days on the Shanghai stock exchange.

Mortgage rate discount

Major Chinese lenders are expanding preferential mortgage rates to cut the burden of the country's home buyers hit by the spreading financial crisis. Starting from the first day of 2009, credit interest rates could be reduced to 70 percent of the benchmark rate from the previous 85 percent, for China's individuals who bought houses on mortgage lending before October 27 2008 and have not paid off the loans.

China's central bank announced in October it would reduce the lower limit of interest rates on individual house loans to 70 percent of the benchmark credit rate from 85 percent, starting from October 27 last year. By lowering mortgage borrowing cost the country tried to help the real estate industry, the largest contributor to its GDP growth.

Shares of Poly Real Estate Group Co.(600048,SH) , the country's second-largest publicly traded developer, rose 10.35 percent in the first two trading days of 2009. The company said today its property sales rose 20.4 percent to RMB 20.5 billion ($3 billion) last year. Poly sold 2.58 million square meters of property in 2008, an increase of 29.5 percent from a year earlier, according to a statement to Shanghai stock exchange

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