The China Economic Scan week in review: week ended 12 April 2009

April 12, 2009 - PRLog -- Chinese stocks ended the week up with the Hang Seng closing up 2.44% at 14,901, the Shanghai Composite up 0.99% at 2,444, and Shenzhen Component up 1.08% at 9,345. This placed the Shanghai Composite up about 30% for the year. Also of note, during the week JPMorgan analysts forecast that the MSCI China index might rise by 15% by the end of 2009.

Among the stories featured on China Economic Scan, there were some major company announcements and Chinese stock market headlines. On Tuesday the Hong Kong court approved the buyout of PCCW by its major shareholders, including tycoon Richard Li. Tsingtao Brewery lifted it’s profit 30% to 699.6 million yuan.

Medical stocks rallied early in the week on the back of government announcements to reform the healthcare sector; a move likely to bolster pharmaceuticals and medical instrument producers. Similarly, toward the end of the week renewable energy stocks gained after news reports revealed that the Chinese government will seek to boost the use of renewable energy to 10% of total energy consumption by 2010.

Financial stocks also had an interesting week with China Pacific Insurance announcing a dismal net profit performance in 2008, down 80%, driven by a slump in the equity markets, with the Shanghai Composite Index falling 65% in 2008. SPD Bank also made the headlines after the bank, in which Citigroup has a small stake (3.78%), revealed plans to raise as much as 15 billion yuan in equity and another 15 billion in subordinated debt.

Reports also surfaced of record loan growth in March, hitting 1.89 trillion versus 1.07 trillion in Feb; bringing the total for the first quarter to 4.58 trillion yuan. Insurers rallied on the back of strong equity market performance, and Ping An stocks jumped after Goldman Sachs and Merrill Lynch raised their price targets for the insurer.

On the macroeconomic front the week featured a few key releases. Early in the week the World Bank said “A recovery in China, likely to begin this year and take full hold in 2010, should contribute strongly to the region’s recovery.” in its semi-annual report.

As a wrap of the key releases, Shanghai shipping traffic (ships entering/exiting Shanghai) in March jumped 28% to 4,112 versus February; Imports and exports of electronic products were reported by MIIT as dropping 30% to US$87 billion in January and February; Cement output rose 10% in the first two months of the year.

Yuan trade settlements will commence in Shanghai upon finalization of regulations; 1,131 trillion yuan was spent through the payment system in 2008 the PBOC said; March auto sales grew 6% to a record 1.10 million vehicles; Chinese urban residents’ average gross salary rose 17% to 29,229 yuan in 2008 the National Bureau of Statistics said.

China’s exports fell for the 5th month in a row by 17% year-on-year to US$90 billion and the trade surplus was US$18.56 billion; the BCCI, a measure of consumer confidence increased slightly to 86.95; Money supply increased in March with M2 rising 25.51% year on year, M1 +17.04%; and M0 +10.88%; Foreign currency reserves rose about US$7.7 billion in Q1 to $1.9537 trillion according to the PBOC.

So it was an interesting week, but next week will be a busy one for China Economic Scan and everyone else who’s watching the Chinese economy and financial markets. The National Bureau of Statistics is scheduled to release Q1 GDP data, industrial production, fixed asset investment, retail sales, and CPI, all on Thursday. So sign up to China Economic Scan for daily updates on the Chinese economy now so you don't miss anything.

by Callum Thomas, Managing Director of China Economic Scan (www.chinaeconomicscan.com)

# # #

China Economic Scan is a leading global provider of daily updates on the Chinese economy. The free daily update covers topics such as economic growth, IPOs and capital raisings, stock market performance, manufacturing data, forecasts, etc. Sign up now!