Textile, shipping shares rise on talk of lifeline
Denise Tsang and Adam Chen in Shanghai
Shares in textile and shipbuilding companies jumped yesterday on speculation of imminent fresh policies to help revive the labour-intensive industries.
Hong Kong stocks, including cotton fabric maker Weiqiao Textile and shipbuilder Guangzhou Shipyard International, and Shanghai-listed firms - fabric producers Youngor Group and Nanjing Textile as well as the mainland's second-biggest shipbuilding conglomerate China CSSC Holdings - jumped in hectic trading.
Weiqiao soared 13.63 per cent to HK$2.75 while Guangzhou Shipyard gained 7.79 per cent to HK$9.26. CSSC leapt 6.99 per cent to 49.55 yuan while Youngor rose 5.53 per cent to 8.94 yuan.
The stellar performance came a day before the State Council is due to examine new measures to support the ailing industries.
Mainland press reports say the measures may include higher value-added tax rebates for textile exports and tax incentives for consumption of mainland-made equipment.
Wen Fenghun, the deputy director of the research institute at Jiang Nan Securities, attributed the stock gains to the imminent State Council assessment on rescue measures for nine industries including steel, car-making, petrochemical, light industry, non-ferrous metals and machinery.
He expects trading in these stocks to remain speculative.
Garment exporter Tommy Lam Chin-ming, who produces jackets in Dongguan for export to Europe and the United States, said a higher value-added tax rebate was needed as overseas orders had slowed to a trickle.
He said many European buyers were demanding discounts of as much as 50 per cent, which would undermine profit margins.
He added the global financial downturn took a heavy toll on his customers, which had placed 30 per cent fewer orders with the company so far this year compared with the same period last year.
'If the tax rebate is raised by 1 percentage point to 15 per cent as rumoured, it will be better than nothing,' he said.
Beijing has raised the value-added tax rebate on textile and garment exports twice since August to 14 per cent against a value-added tax of 17 per cent on average.