After finishing lower now in two straight sessions and shedding more than 140 points in the process, the China stock market could be due for a rebound on Thursday, thanks to modestly positive domestic cues. Chinese Premier Wen Jiabao said that his country could take tightening measures to combat rising inflation - but he also said the government would take steps to safeguard the stock market, which allowed investors a sigh of relief. On a global level, investors may be cautious, despite relative optimism from Wall Street, as they wait for Friday's all-important non-farms payroll data, while record oil prices also lend negative sentiment. The market was moderately lower, extending the previous day's 2.32 percent decline as the Shanghai Composite Index gave up support at 4,300 points for the first time in a week. For the day, the index dropped 42.79 points or 0.99 percent to close at 4,292.65 after trading between 4,210.96 and 4,352.82 on turnover of 173.64 billion yuan. Among the decliners, Tangshan Iron & Steel was down 9.69 percent, while Baoshan Iron & Steel lost 4.69 percent, China Merchants Property Development Co was down 2.07 percent, Wuhan Iron & Steel plunged 6.29 percent, Angang Steel lost 5.56 percent, Shandong Gold Mining lost 3.01 percent, PetroChina dropped 1.07 percent, China Petroleum & Chemical or Sinopec tumbled 3.63 percent, China Shenhua Energy lost 2.92 percent, Shenzhen Development Bank gave away 1.14 percent and Beijing Yanjing Brewery slumped 4.71 percent. Bucking the trend, Sichuan Hejia gained 9.96 percent, Longping High-tech rose 8.70 percent and Zhongjin Gold edged up 0.16 percent. Wall Street offers a cautiously optimistic lead to the market after ending Wednesday's trading higher despite a substantial sell off in afternoon trading that followed an announcement from Ambac - which plans to raise at least $1.5 billion by selling common stocks and equity units to strengthen its capital base in an effort to preserve its crucial triple A debt rating. It had commenced concurrent offerings of at least $1 billion of common stock and at least $500 million of equity units. The markets saw early gains after the Institute for Supply Management reported a stronger than expected reading on the health of the service sector. While the ISM service sector index indicated a contraction in the sector in February, it wasn't as low as analysts expected. The index came in at 49.3, while Wall Street expected a reading of 46.5. In the afternoon, the Federal Reserve released its Beige Book report, a compilation of reports from each of the twelve Fed districts released roughly two weeks before each Federal Open Market Committee meeting. According to the report, economic growth has slowed since the beginning of the year. With regard to inflation, the report said that upward pressure on prices from rising materials and energy prices was visible in almost all of the Fed districts. After seeing strong gains in the morning, the major averages all fell into negative territory following Ambac's announcement. The averages were able to climb back above the unchanged line, however, ending the day higher. The Dow closed up 41.19 points or 0.3 percent at 12,254.99, the Nasdaq closed up 12.53 points or 0.6 percent at 2,272.81 and the S&P 500 closed up 6.95 points or 0.5 percent at 1,333.70. In corporate news, Cathay Pacific Airways Ltd saw net profit for 2007 rise 71.8 percent to 7.02 billion Hong Kong dollars on the back of strong passenger demand, the airline said Wednesday - well above expectation of 5.9 to 6.06 billion Hong Kong dollars. The airline said turnover rose 24 percent to a record 75.36 billion Hong Kong dollars, compared with 60.78 billion a year earlier. Passenger revenue increased by 17 percent to 39.3 billion Hong Kong dollars, while high demand from first and business class passengers helped push up yield by 11.1 percent to 52.2 HK cents. Also, Ping An Insurance shareholders have approved the company's plan for issuing new shares and convertible bonds, aiming to raise about 120 billion yuan. The refinancing plan received the approval of more than 90 percent shareholders, as the company is planning to issue up to 1.2 billion new A-shares to raise capital to invest at home and abroad.
March 5, 2008 8:23 PM