RTTNews - The Hong Kong stock market finished within shouting distance of the 20,000-point plateau every day last week, alternating positive and negative finishes and ultimately finishing the week lower by 700 points. The Hang Seng Index slid below the 20,200-point support plateau, although now analysts are expecting the market to bounce back to the upside at the opening of trade on Monday.
The global forecast for the Asian markets is positive, thanks to better than expected economic news out of the United States. Housing stocks are expected to see strength for a change on Monday, while resource stocks also are tipped higher. The European and U.S. markets saw sharp gains on Friday, and now the Asian markets are forecast to extend those gains.
The Hang Seng finished modestly lower on Friday, as losses among the industrial issues and financials were pared by gains from the property and utility sectors.
For the day, the index was down 129.84 points or 0.64 percent to close at 20,199.02 after trading between 20,002.78 and 20,439.42 on turnover of 60.16 billion Hong Kong dollars.
Among the decliners, PetroChina fell 1.04 percent, while CNOOC lost 0.39 percent, Sinopec was down 0.39 percent, China Mobile fell 3 percent, HSBC Holdings eased 0.3 percent, HKEx shed 0.76 percent, Industrial and Commercial Bank of China lost 0.6 percent and China Construction Bank fell 1 percent.
Finishing lower, SHK Properties surged 2.1 percent, while Cheung Kong added 0.72 percent and Henderson Land gained 0.32 percent.
The lead from Wall Street is firmly optimistic as stocks saw a notably strong outing on Friday, with early buying interested spearheaded by better than expected existing home sales data and relatively optimistic economic commentary from Federal Reserve Chairman Ben Bernanke. The major averages all rose by substantial margins on the day, extending their winning streak for the fourth straight session.
Friday's rally was largely sparked a report from the National Association of Realtors showing that existing home sales increased by much more than expected in the month of July, with the headline figure rising for the fourth consecutive month. Existing home sales rose 7.2 percent to an annual rate of 5.24 million units in July from a 4.89 million unit rate in June. Economists had been expecting a more modest increase to a 5.0 million unit rate. The increase in sales was the largest monthly gain on record for the total existing-home sales series dating back to 1999. With the increase, existing home sales rose for the fourth consecutive month, the first four-month winning streak since June of 2004.
The markets also looked to remarks from Federal Reserve Chairman Ben Bernanke, who spoke about the recent financial crisis and the near-term economic outlook at the Kansas City Fed's annual conference in Jackson Hole, Wyoming. The Fed chief said, Economic activity appears to be leveling out, both in the United States and abroad, adding that the prospects for a return to growth in the near term appear good. However, Bernanke warned that the recovery might be sluggish at first, with unemployment declining only gradually from high levels.
On the earnings front, Gap Inc. (GPS), Ann Taylor Stores (ANN) and J. M. Smucker Company (SJM) reported earnings that beat Wall Street estimates on the bottom line.
The major averages were rangebound for much of the afternoon, although they reached new highs for the session in the final hour of trading. The Dow closed up by 155.91 points or 1.7 percent at 9,505.96, the NASDAQ climbed by 31.68 points or 1.6 percent to 2,020.90 and the S&P 500 rose by 18.76 points or 1.9 percent to 1,026.13. With the four-day winning streak, the major averages all closed notably higher for the week, ending the session at multi-month closing highs. The Dow advanced by 2 percent, the NASDAQ moved up by 1.8 percent and the S&P 500 posted a gain of 2.2 percent.
In economic news, Fitch Ratings on Friday affirmed Hong Kong's long-term foreign and local currency Issuer Default Ratings at 'AA' and 'AA+' respectively, giving stable outlooks to both. It also confirmed the short-term foreign currency IDR at 'F1+' and the Country Ceiling at 'AAA.' The firm said the sovereign credit worthiness was underpinned by the country's strong external financial positions, prudent public finance management and a sound banking system.
Also, the Ministry of Finance said on Friday that profits of Chinese state-owned enterprises declined 22.8 percent annually to CNY 686.18 billion during January to July period. Profits were down 2 percent in July from June. Enterprises owned by central government showed a profit of CNY 509.41 billion in January to July, down 16.6 percent from the same period of last year. Meanwhile, profits of local state owned enterprises fell 36.4 percent to CNY 176.77 billion.
Finally, China's gross domestic product is forecast to grow nearly 8.5 percent year-on-year in the third quarter, the China Securities Journal reported on Friday, citing forecasts from the State Information Centre. Exports are expected to decline 20 percent and imports would fall 12.7 percent. Consumer prices are forecast to drop 1.3 percent year-on-year in the third quarter.
In corporate news, China Petroleum & Chemical Corp (Sinopec) reported on Sunday that first-half profit increased from last year, driven by lower crude prices, and the recent fuel price hikes made by the Chinese government. Looking ahead, the company said it expects international crude oil price in the second half to be higher than the first half.
In accordance with the International Financial Reporting Standards, Sinopec posted net profit attributable to equity shareholders of the company of RMB 33.25 billion or RMB 0.381 per share for the six-month period of 2009, compared to RMB 7.68 billion or RMB 0.057 per share in the prior year period. The Chinese-based company's turnover, other operating revenues and other income, was RMB 534.025 billion, down 30.2 percent over last year.
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