Proactiveinvestors recommends

Additional Information

Market:	Shanghai Hong Kong
Sector:	Financial Services
EPIC:	CHINA

China News Summary
A daily summary of the major financial news stories in China, supplied by our Bureau in Beijing. To read more breaking news from Asia, visit http://www.proactiveinvestors.com.hk

China imposes moratorium on "chaotic" steel industry

Friday, August 14, 2009

Mainland markets dropped today as continued uncertainty about economic fundamentals and monetary policy weighed on recent gains. The Hong Kong market rose slightly after early falls.

The Shanghai Comprehensive Index slid 3 percent to its lowest close in six weeks and a weekly drop of 6.55 percent, the steepest in five months. Losing shares outnumbered winners by 820 to 120, while turnover on the Shanghai exchange rose to RMB145.8bn from yesterday's RMB138.2bn. The Shenzhen Composite Index dropped 3.58 percent.

The Hang Seng Index edged up 0.2 percent finishing the week 2.5 percent up. The China Enterprise Index, which tracks key mainland companies listed in Hong Kong, closing unchanged at 11,899.80.

Taiwan's Taiex Index lifted 0.5 percent.

Concerns about a forthcoming rash of IPO on the mainland added to investor concerns on talk that another major brokerage was about to get approval to list. Last week, Everbright Securities Co, (HK:0165) raised RMB10.96bn in its Shanghai offering.

Banks led the falls in Shnaghia. China CITIC bank (SH:601998) sank 4.8 percent. ICBC (SH:601398), China's biggest lender, dropped 3.2 percent. Bank of Communications (SH:601328) dropped 3.6 percent. China Merchants Bank (SH:600036, HK:3968), which said it plans to raise RMB18bn in a Shanghai and Hong Kong a rights issue, lost 2.4 percent in Shanghai and 3.4 percent in Hong Kong.

Insurers also made losses. China Life Insurance (SH:601628) fell 2 percent after announcing insurance premiums in the first seven months were down 5.8 percent from a year earlier. China Pacific Insurance (SH:601601) fell 2.1 percent. Ping An Insurance (SH:601318) dropped 2.2 percent.

China's Yanzhou Coal Mining Co (HK:1171, SH:600188) rose 2.3 percent in Hong Kong and 3.7 percent in Shanghai after announcing it will buy Australian coal miner Felix Resources Ltd (ASX:FLX).

China imposes moratorium on "chaotic" steel industry

The English language China Daily today reported the government has instituted a three-year moratorium on the steel industry for applications to expand production or start new projects.

China has long been tackling the steel industry's overcapacity, but has now called the industry "chaotic" and linked the issue to the recent Rio scandal, in which four employees of the mining giant have been charged for trade secrets infringement and bribery.

China's Industry and Information Technology Minister Li Yizhong said that "with China's steel industry in turmoil over the Rio Tinto scandal," the country "needs to have more say in the global iron ore trade."

"Spot prices of iron ore are increasing sharply on the global market and we hope to see an appropriate relationship between spot prices and long-term contract prices," he added.

No investment advice

The Company is a publisher and is not registered with or authorised by the Financial Services Authority (FSA). You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.