Friday, January 14, 2011

China's shares end down, weighed by tightening talk

SHANGHAI: China's key stock index closed down 1.3 percent on Friday, Jan 14 and was down 1.7 percent for the week as speculation of further policy tightening by Beijing as early as this weekend kept investors on the back foot.

But some analysts said the chances of a rate rise in the coming days were slim ahead of key economic data due next week.

The benchmark Shanghai Composite Index fell to 2,791.3 points after a 0.2 percent rise on Thursday. ($1 = 6.60 yuan).

In SEOUL: Seoul shares rose 0.9 percent on Friday buoyed by firm gains in financials and auto issues including Hana Financial Group and Hyundai Motor, but losses in crude oil refiners such as SK Energy weighed.

The Korea Composite Stock Price Index (KOSPI) ended up 0.89 percent at 2,108.17 points.

"Now that a lot of uncertainties that had pervaded the market have been cleared, upside momentum has revived," said Kim Hyoung-ryoul, a market analyst at NH Investment & Securities.

Shares in Hyundai Motor Co, South Korea's top automaker, rose 4.43 percent to 200,500 won, after hitting an intraday record high of 203,000 won, following its launch of new Grandeur sedan in the domestic market.

Analysts said the launch raised hopes the higher-margin model would improve its profit, analysts said.

Hyundai said it aimed to sell 100,000 redesigned Grandeur sedans globally this year.

Shares in Kia Motors rose 1.2 percent.

Crude refiners lost ground after media reports quoted South Korean President Lee Myung-bak as saying investigation into domestic oil product prices were necessary due to their high prices and impact on domestic consumer prices.

"President Lee's comment weighs on sentiment, but it is not likely to directly affect refining margins," said Park Jae-cheol, an analyst at Mirae Asset Securities.

"Pricing of gasoline may be impacted, but other types of oil products should track market trends," Park added.

Shares in SK Energy fell 3.08 percent and S-Oil lost 2.99 percent. GS Holdings, the holding company of GS Caltex, South Korea's No.2 crude oil refiner, shed 2.11 percent.

But financial plays continued gains buoyed by expectations of a series of interest rate rises, following Bank of Korea's rate increase decision on Thursday.

Shares in Shinhan Financial Group rose 2.3 percent and Hana Financial Group 4.7 percent.

Insurers also advanced as they have substantial holdings in interest bearing assets. Samsung Life rose 3.3 percent and Korea Life climbed 0.6 percent.

Shares in Korea Express spiked 14.5 percent after POSCO said it was considering purchasing a stake in the logistics firm.

But shares in POSCO fell 1 percent pressured by its disappointing set of fourth quarter earnings on Thursday.

The world's No.3 steelmaker posted a weaker-than-expected quarterly profit and warned it was struggling to pass on rising costs as floods in Australia disrupt raw material supplies.

Tong Yang Major jumped 5 percent after the company said late on Thursday it plans to make a share offering worth around 325.8 billion won, easing fears about the firm's financial health.

Firm gains in shipyards helped, as shares in Hyundai Heavy Industries rose 2.8 percent and Daewoo Shipbuilding & Marine Engineering advanced 3.2 percent.

Elsewhere, the won currency's strength lifted tour agencies.

Hana Tour, an on-and-offline tour agency, rallied 7.2 percent and Modetour gained 6.3 percent.

The KOSPI 200 March futures index rose 2.65 points to 278.0 points. The KOSPI 200 spot index gained 2.65 points to 278.17. - Reuters

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