Chinese carmakers surge on promise of continued stimulus
Oct 23rd 2009 7:00AM
Updated Dec 4th 2009 5:08PM
Shares in Asia closed higher Friday as confidence that the Chinese government will continue to prop up its economy with massive economic stimulus measures returned. The Shanghai Composite Index climbed 1.9 percent to close at 3,108, the Hang Seng rose 1.7 percent to end the day at 22,590, and the Nikkei Index added 0.2 percent, finishing the session at 10,283.
In China, news that the government will continue to support the automobile industry sent carmaker Shenyang Jinbei Automotive Co. Ltd. soaring to its 10 percent daily limit, along with Zhongtong Bus & Holding Co. Ltd., which also shot up10 percent. More modest gains were reaped by other carmakers: DongFeng Automobile Co. Ltd. (DNFGF) climbed 4.1 percent, Beijing-based Beiqi Foton Motor Co., climbed 2.8 percent and Dongan Heibao Co. Ltd. was up 0.6. The Chinese car industry seems like a promising bet for investors as it has a huge number of potential customers who are becoming more and more interested in improving their lifestyles. Even Warren Buffett has put money into carmakers there, backing car and battery producer BYD Co. (BYDDF).
Chinese banking stocks advanced, with the biggest gains reaped for China Merchants Bank Co. Ltd. (CIHHF), which advanced 4.5 percent. China Construction Bank Corp.(CICHF), rose 2.9 percent to 6.07 yuan and China Minsheng Banking Corp. added 2.5 percent.
Toll booth operator Dongguan Development Holdings Co. also hit its 10 percent daily trading limit. Dongguan Development runs tollbooths for the Dongguan Expressway, which serves the rapidly expanding industrial business area of China's busy Pearl River Delta. China's expressway system is fairly new. It was built in 1988 and is one of the longest in the world, second only to that of the U.S.
Hong Kong-listed Geely Automobile Holdings Ltd. (GELYF), which received a cash infusion from Goldman Sachs earlier this year, also profited from the news of China's commitment to the auto industry, surging 4.1 percent. Oil producer Cnooc Ltd. (CEO) climbed 5.4 percent while China Life Insurance Co. soared 5.7 percent.
In Tokyo, Japan Airlines Corp. (JALSF) plunged 6.7 percent on renewed fears that the airline will not be able to come up with a plan to turn the company around. Shares in the carrier's lenders followed suit with Mitsubishi UFJ Financial Group Inc. (MTU) losing 2.5 percent, Mizuho Financial Group Inc. (MFG) dropping 2.8 percent and Sumitomo Mitsui Financial Group Inc. (SMFJY) falling 2.2 percent.
Profits posted by Japanese property developers outpaced forecasts, sending shares in home builder Daiwa House Industry Co. (DWAHF), up 3.7 percent, and Tokyo apartment developer Tokyu Land Corp. (TOLAY) up 3.3 percent. As the region continues to develop and individual wealth increases, the desire for better homes and, for many a first car, can only grow.