Investor concerns over China lending

January 15, 2010

, HONG KONG, Jan 15 – Investor concerns that China will move to further rein in lending weighed on Shanghai and Hong Kong stocks Friday as regional markets eased back after a strong run the previous day.

However, technology plays were higher after US bellwether Intel, the world\’s biggest chipmaker, posted a profit surge of almost 900 percent.

Chinese stocks fell 0.22 percent on expectations that Beijing will try to curb bank lending as it aims to tame soaring economic growth following the massive stimulus measures put in place to beat the global slump.

The government this week increased the amount of money banks must hold in reserve, after raising the yield on one-year bills for the first time in five months.

The Shanghai Composite Index, which covers both A and B shares, was down 7.18 points at 3,208.37.

"There are expectations that the government may take fresh administrative measures to rein in rapid bank lending growth near term," Huatai Securities analyst Dai Shuang told Dow Jones Newswires.

And Hong Kong shares opened 0.36 percent lower, with the Hang Seng Index down 79.18 points in early trading to 21,637.77.

Tokyo\’s Nikkei fell 0.17 percent, with troubled Japan Airlines, which has fallen around 90 percent since Monday, unchanged at eight yen.

But Shiseido, Japan\’s largest cosmetics company, rose 4 percent to 2,020 yen after it said it had agreed to buy Bare Escentuals of the United States for 1.7 billion dollars in a friendly takeover.

Regional stocks were weighed by disappointing data from the United States that showed retail sales fell unexpectedly by 0.3 percent in December.

Analysts had expected a gain of 0.5 percent in sales, the key driver of US economic activity.

Sydney retreated 0.60 percent by noon but Singapore was 0.14 percent higher.

Technology stocks rose after Intel said net profit soared nearly nine-fold — by 875 percent — to 2.3 billion dollars in the three months to December 26.

Intel also said it expects revenue of between 9.3 billion dollars and 10.1 billion dollars this quarter, better than the 9.35 billion dollars forecast by analysts.

In Japan Tokyo Electron was up 2.0 percent and Elpida Memory added 4.4 percent, while in Seoul Hynix Semiconductor rose 2.0 percent and Samsung Electronics gained 0.4 percent.

The dollar dropped to 91.09 yen in Tokyo morning trade from 91.23 in New York late Thursday as the impact of the retail data set in, while the euro slipped to 1.4471 dollars from 1.4501 and to 131.83 yen from 132.27.

In Asian oil trade concerns over demand in the United States sent New York\’s main contract, light sweet crude for February delivery, 49 cents lower to 78.90 dollars a barrel.

Brent North Sea crude for March delivery dropped 57 cents to 78.00 dollars.

Gold opened at 1,143.00-1,144.00 US dollars an ounce in Hong Kong, up from Thursday\’s close of 1,139.00-1,140.00 dollars.

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