World Bank Predicts 9% Growth for China, Banking and Property Shares Soar

Markets in Asia were mixed Thursday. In Japan, the Nikkei 225 Index rose 1.2% to 10,868 and in China, the Shanghai Composite Index added 0.2% to end the day at 3,159. Hong Kong's Hang Seng Index fell 2% to close at 20,863.

The World Bank has forecast that the world economy will expand at 2.7% in 2010, with China due to grow at 9%, outpacing every other country. At this rate China will replace Japan as the world's second largest economy. China is implementing measures to control the pace of the country's growth, including imposing restrictions on bank loans, increasing reserve ratios and levying new property taxes. The country has seen extraordinary growth in the past year as a hefty government stimulus package encouraged big spending among China's new middle class -- now the proud owners of thousands of new cars, refrigerators and other high-ticket items.

Today Chinese shares in banks continued to climb. China Construction Bank surged 2.3%, China Merchants Bank and Industrial & Commercial Bank of China each gained 1.8%. and Bank of China added 0.7%. Insurers also gained with China Life Insurance soaring 2.2% and Ping An Insurance Group rising 2%.

Chinese real estate companies gained value today, despite warnings from many analysts that China's property market has been overheated by speculators and is approaching bubble levels. Shanghai Shimao spiked 6.3% on reports that it plans to raise money through a private placement, according to Bloomberg. China Vanke, a premier residential property developer rose 1% and Poly Real Estate added 0.3%.

In Japan, electronics companies were the big winners, with TDK surging 4.8%, Sony Corp leaping 4.1% and Panasonic climbing 3.4%. Photo equipment companies were also in positive territory with Konica Minolta gaining 2.9% and Canon rising 1.9%. Computer-related companies had a good day today: Casio Computer added 1.9% while chipmaker Elpida Memory rose 4.6% and chip tester company Advantest gained 3.6%.

Meanwhile, the Hang Seng fell to a three-month low on worries over lending restrictions and inflationary concerns. Banking shares slipped with both Industrial & Commercial Bank of China and China Merchants Bank falling 2.9%, China Construction Bank dipping 1.6% and HSBC losing 0.9%.

Hong Kong-listed property companies also lost value, even as their Chinese-listed counterparts rose. Shimao Property fell 3.7%, Henderson Land receded 4.1% and Country Garden Holdings fell 2.7%.

But it wasn't all bad news. Record numbers of travelers are expected over the upcoming Chinese New Year in celebration of the Year of the Tiger. Airlines posted gains in Hong Kong with Air China surging 5.6% and China Southern Airlines advancing 2.5%. And if the economy continues to grow, investors will have even more to celebrate.
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