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Investors in China’s main financial district are talking about the following before the start of trade today:
Shares may be mixed as investors continue to respond to news of a government cut in stock trading fees effective June 1. Shares in brokerages benefitted yesterday on hopes for increased trading and other profits. Haitong Securities, which last week succeeded with a secondary listing in Hong Kong, rose by 2.3% and GF Securitiesshot up 5.3%. Both outperformed the Shanghai Stock Exchange’s 1.8% rise.
Hilary Clinton and Timothy Geithner are in Beijing this week for the annual Sino-U.S. gabfest, “China-U.S. Strategic and Economic Dialogue.” It’s usually a fair bet that China’s controlled currency will rise in value against the dollar when high-profile, politically sensitive talks like these are underway, and yesterday was no exception. China’s currency closed at 6.2670 yuan to the U.S. yesterday; that’s the highest since the renminbi was de-pegged from the dollar in 2005, according to today’s Shanghai Daily. The higher currency squeezes exporters profit margins, however, and shares in Hong Kong-traded Chinese textile firm ShenzhouInternational fell to HK$14.3 from HK$14.6 a session earlier.
China’s retailers have been squeezed this year by higher costs, and shares in Gome, the appliance retailer controlled by jailed Chinese billionaire Wong Kwong Yu, tanked 11% in Hong Kong yesterday following a profit warning. (See related story here.)
Good timing: Western Securities, which raised the equivalent of $276 million in an IPO last month by selling 200 million new shares at 8.7 yuan each, starts trading today at the Shenzhen Stock Exchange. With brokerage stocks in favor, it has a good chance to outperform. The company, one of the largest brokerages in western China, forged a 51%-owned fund management company with the Bank of New York Mellon‘s wholly-owned subsidiary BNY Mellon Asset Management International in 2010. Retailer Beijing Cuiwei Tower, which issued 77 million new shares at 9 yuan each last month, will also start trading at Shanghai Stock Exchange today.
And in overnight trading in the U.S. shares in debt-laden, money-losing solar company LDK plunged another 7% last night. The government-published Shanghai Securities News today has a full-page investigative report about the company’s financial problems and tight supply chain. The main headline – in Chinese — is “LDK Sinks Deeply Into Debtgate,” a word play on the U.S. political scandal, “Watergate.”
– With Maggie Chen
source: forbes.com
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