Lujiazui Breakfast: News And Views About China Stocks -- June 8?

Investors in China’s main financial district are talking about the following before the start of trade today: 

The People’s Bank of China, China’s central bank, cut its key one-year lending rate by 0.25 percentage point to 6.31% effective today amid worries about a slowdown in economic growth.  The move, which also includes a cut in deposit rates and allows for a wider rate fluctuation range, suggests the government is at least trying to provide symbolic support to the economy, but investors are worried that the move also suggests upcoming economic data from May will be poor.  

The widening of the country’s bank pricing range may harm shares in banks that will face more competition from the change, especially small and medium sized banks such as Bank of Ningboand Bank of Nanjing. They may have to pay more to attract deposits compared with the country’s largest state-owned banks, and yet cut their lending rate in order to win over borrowers.   

The cut also won’t ease worries that a big wave of IPOs will pull cash away from other shares in the coming months, nor a perception that the government would rather put off any big decisions on the economy until the expected new leadership of Xi Jinping takes office in the coming months. Having said that, in another step to stimulate the economy, the Finance Minister Xie Xuren said yesterday the government will step up selective tax cuts to stimulate consumption.  And amid an overall mood of worry, Chinese media also said today auto sales in May rose by a 16% from a year earlier; the increase from April was a relatively mild 2.2%. That performance might benefit shares in automakers such SAIC, a China joint venture partner of GM.  SAIC itself announced today that sales in May rose to 367,997 vehicles from 304,000 a year ago. Overall worried about auto industry inventory are likely to persist, however, at a time of relatively slow economic growth.  

In overnight trading, shares in Chinese Internet search engine Baidu rose by 2.8% to $122.46 on reports that Apple will add its search function to iPhones sold in China. Baidu shares well off their 12-month high of $165.96.

 In trading yesterday, shares in Hunan Valin Steel of China, a steelmaker about 30% owned by ArcelorMittal, rose by 0.8% after its main  parent company said it would sell shares in an auto sheet business to Hunan Valin Steel and ArcelorMittal, the world’s largest steelmaker.   ArcelorMittal would gain the option to sell 20% of Hunan Valin Steel back to the parent, leaving the international steel giant more focused on China’s auto industry.  ArcelorMittal Chairman Lakshmi Mittal ranked No. 21 on the 2012 Forbes Billionaires List with wealth of $20.7 billion.

And also in overnight trading, shares in Ctrip rose by 1.8% after the company began to allow individual customers to take advantage of group purchases (see related story here).

Two stocks will debut today on domestic exchanges. Huizhou Speed Wireless Technology, a maker of wireless antennas, issued 23.35 million shares at 14.3 yuan each last month, raising about 334 million yuan, or $53 million. Its clients include ZTE, Huawei, Samsung and Foxconn.   And Beijing Watertek Information Technology, a  software supplier will list. The company, whose clients include the Agricultural Bank of China and Defense Ministry, raised $60 million in an IPO last month.

source: forbes.com

please give me comments thanks

Posted in: Lujiazui Breakfast