Stock Talk

Hong Kong stocks are tipped to open higher as Chinese PM Wen urges boost to growth

PUBLISHED : Monday, 27 August, 2012, 8:00am
UPDATED : Wednesday, 29 August, 2012, 3:05pm

Hong Kong stocks are expected to rise at the open after Chinese Premier Wen Jiabao urged targeted efforts to ensure steady export growth and after new hints from the United States  reignited hopes of further quantitative easing in the world's biggest economy.

China's Wen said during a trip to Guangzhou on Friday that the nation should pay "close attention" to the difficulties facing the export sector and the uncertainty over whether exports would meet a full-year growth target, according to a statement released on the State Council's website.

The benchmark Hang Seng Index (HSI) fell 1.25 per cent to close at 19,880.03 on Friday, posting its biggest single-day decline in nearly a month, on fears that China and US would not roll out further easing measures despite slowing growth.

However, US Fed Chairman Ben Bernanke said in a letter to a congressional oversight panel overnight on Friday that the central bank still has room to deliver additional monetary stimulus to boost the US economy, bolstering hopes of further quantitative easing.

The Standard & Poor's 500 Index added 9.05 points, or 0.65 percent, to 1,411.13 last Friday. In London, the FTSE 100 index closed flat at 5,776.6.

In Europe, plans by the European Central Bank (ECB) to fight crisis by buying bonds faced more uncertainty after Deutsche Bundesbank President Jens Weidmann on Sunday reiterated criticism of  the ECB's bond-purchasing plans.  Weidmann, a former economic adviser to Merkel, said in a front-page interview in influential German magazine Der Spiegel that the bond buys could violate rules against the ECB providing outright financing to governments.

On the earnings side, BYD (1211.HK), China Southern Airlines (1055.HK), ENN Energy (2688.HK), Sands China (1928.HK) are among a batch of companies due to report interim results later in the day.

Factors to watch:

-- Qianhai, an economic development zone near Hong Kong, could absorb as much as 4.72 trillion yuan of fixed-asset investment over the next ten years, and the local authority is picking investors for its infrastructure projects, The Shanghai Securities Journal reported on Monday morning.

-- China is likely to incorporate a property tax as a target for the 12th five-year development plan for the sector, which would involve extending the property tax trial scheme that is currently only effective in Chongqing and Shanghai and making it nationwide.

-- The nation's largest oil refiner Sinopec Corp.(0386.HK) said first-half net profit slumped 41.1 per cent to 23.7 billion yuan as the government cut fuel prices twice in the second quarter. However, the results, which were announced after the market close on Friday, still came above most market estimates.

-- China Construction Bank (0939.HK) said Sunday first-half net profit rose 15 per cent to 106 billion yuan from a year earlier thanks to higher interest income and commissions.

-- Chinese developer Greentown China (3900.HK) said net profit soared 102 per cent to 1.81 billion yuan in the first half. The debt-laden firm, whose gearing ratio fell to 93.5 per cent from 149 per cent previously, said its financial strain was "markedly relieved" after it disposed of several assets and introduced strategic investors.