China Economic Scan - Your daily update on the Chinese economy.
In this edition: Auditor reports on spending of stimulus plan funds, China gold reserves to back Yuan internationalization, Ping An expects steady year in 09, Esprit falls in Hong Kong on EU data, Chinese stocks close up on Monday.
Top 5 headlines
Auditor: China's stimulus plan goes well, with minor exceptions
- China's National Audit Office (NAO) said Monday that no major problems, but some notable minor ones, had been found as of the end of the first quarter by its oversight of the country's stimulus package.
- Of the 100 billion yuan (14.64 billion U.S. dollars) allocated by the central government last year, all had been disbursed. Another 130 billion yuan appropriated in February had been mostly distributed, NAO said.
- The 230 billion yuan investment was included in the 4-trillion-yuan package announced late last year to combat the global economic downturn.
China Gold Reserves May Back Yuan Internationalization
- China's gold reserves may serve as backing for the yuan as Beijing promotes its use overseas, said Zheng Lianghao, managing director of the World Gold Council's Far East division.
- Zheng said increasing gold holdings would provide China with a useful hedge as the dollar faced the possibility of depreciation.
- In April China's gold reserves had risen 454 metric tons since 2003 to 1,054 tons.
Ping An Expects ‘Steady Year’ of Profit in 2009, President Says
- Ping An Insurance, China’s second-largest insurer, will have a “steady year” of profit as an equity-market rally boosts returns and premium growth will be “very strong,” President Louis Cheung said.
- Ping An’s first-quarter profit fell 72% as lower bond yields, following five interest rates cuts since September, and higher expenses tempered investment returns.
- “This year will be a steady year for us,” Cheung said. “We expect to maintain very strong growth in premiums and in other business lines.”
Esprit Falls on Concern European Slump May Harm Sales
- Esprit, which makes 85% of sales in Europe, fell as much as 6.8% to HK45.60, the biggest intraday drop since May 8.
- The retailer said May 13 that sales in the nine months through March fell 2% to HK$27.2 billion ($3.5 billion) as the local currency gained against the euro.
- Esprit’s wholesale revenue, including earnings from department-store counters, fell 8% to HK$14.8 billion, even as retail sales rose 5.9% to HK$12.2 billion.
China shares up on hope of reviving economy
- Chinese stocks edged up on Monday with the Hang Seng up 1.38% to 17023, the Shanghai Composite up 0.28% to 2,653, and the Shenzhen Component up 0.40% at 10314.
- "It's still a strong market. Investors are closely watching government policies and betting on when the economy would revive," said Chen Jinren, an analyst for Huatai Securities.
- China Shenhua Energy, the country's biggest coal producer, jumped 3.2% to 28.05 yuan; Kailuan Clean Coal soared by the daily upside limit of +10% to 35.44 yuan, while Datong Coal Industry Co. gained +9.84% to 37.73 yuan. Tangshan Iron & Steel surged +5.1% to 7.28 yuan and Handan Iron & Steel added +3.5% to 4.97 yuan.
Financial Indicators:
| Metric | Value | Point change | % change |
| Hang Seng Index | 17,023 | 232.21 | 1.38% |
| Shanghai Composite | 2,653 | 7.52 | 0.28% |
| Shenzhen Component | 10,314 | 40.81 | 0.40% |
| TAIEX | 6,578 | 88.72 | 1.37% |
| CNY/USD | 6.8315 | 0.004 | 0.06% |
Source: China Economic Scan
