Chinese Shares Surge Along With Foreign Investments


Shares rose in Asia Wednesday. In Shanghai the Composite Index climbed 1.8% to 2,758 and in Hong Kong the Hang Seng rose 1.1% to 24,420. Japan's Nikkei 225 Index was up 0.4%, ending the day at 10,557.

Direct foreign investment in China rose a whopping 17.4% in 2010, hitting a total of $106 billion. According to the BBC, more than half that amount came from Hong Kong and nearly a fifth of it funded China's booming property market. But much of it also went into businesses in the country's less developed regions where labor is cheap, making the price of setting up a car production facility or an electronics factory worthwhile. In 2009 the amount of foreign investment in China sank thanks to the global recession, but as things start looking up around the world, China is looking like a good bet.

Investors plowed money into railroad companies, especially those with big contracts to supply cars for China's expanding railroad system. CSR Corp. and China CNR Corp. both gained the 10% maximum daily limit, helped by reports that they're on the brink of winning an $800 million contract to fill U.K. orders.

Shipping firms also shot up on better than expected profits. China Shipping Container surged 7.4% after Citigroup upgraded the stock to buy. Other lines also saw gains with China Cosco jumping 4.1% and China Shipping Development advancing 2.3%.

Hong Kong-listed shipping companies gained as well. China Cosco blasted up 7.6%, Cosco Pacific climbed 5.2% and Pacific Basin Shipping rose 1.6%.

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China's rosy future was a boon to commodity shares in Hong Kong. Aluminum Corp. of China, or Chalco, shot up 3.9%, and Jiangxi Copper, a huge supplier of the miles of copper needed to wire up and plumb newly built skyscrapers, gained 0.8%. Power companies also benefited with coal-based Shenhua Energy leaping 2.6%.

Revenue streaming into Macau's casinos is also expected to surge, with some predicting a 30% increase in 2011, which would bring the total to $30 billion. That prognosis was enough for analysts to boost ratings, sending shares soaring. Galaxy Entertainment rocketed up 6.8%, Sands China surged 5.1% and Wynn Macau jumped 4.6%. SJM Holdings, run by Hong Kong billionaire Stanley Ho, zipped up 4.8%.

Optimism about China's growth was reflected in the share price of Chinese banks. Bank of China rose 1.2%, Industrial & Commercial Bank of China added 0.7% and Bank of Communications gained 0.6%. Hong Kong-based HSBC advanced 0.5%.

In Japan investors took cues from U.S. companies Apple (AAPL) and IBM (IBM), which both reported higher-than-expected earnings. Shares in Japanese electronics makers followed suit with Hitachi jumping 3.8%, Casio Computer gaining 0.9% and Sony adding 0.6%

Manufacturers of car parts had a great day. NTN, which makes engine components as well as other machinery, surged 4.7%, and Jtekt, part of the Toyota group, jumped 2.3%. Among car makers Mazda fell 0.8% and Toyota sank 0.7% while Nissan rose 0.6% and Isuzu added 0.5%.

Some of the day's biggest gainers in Japan were textile producers who also make industrial fibers and critical elements for LCD screens. Unitika soared 5.1% and Toray Industries built on yesterday's gains adding another 4.7% to its share price.