6:00AM New York, 6:00PM Hong Kong - China’s reliance on foreign trade rises to 60%. Stocks in Shanghai and in Hong Kong fell.

Market Sentiment

In Hong Kong trading Hang Seng Index fell 2.51% or 565.17 to 21,949.75, and the China Enterprises Index of Hong Kong listed mainland share, or H shares, dropped 2.84% or 348.95 to 11,947.64. In Shanghai trading CSI 300 Index declined 2.53% or 70.07 to 2,703.08.

Exim Bank of China NPL Drops 1.8%

Export-Import Bank of China said yesterday its non-performing loan ratio plummeted to 1.8% by June from 2.45% recorded in the comparable period a year earlier. According to the bank, the fall is as a result of a raft of structural reforms, improved risk management and synergies with overseas financial institutions.

In the period, outstanding loans rose by Rmb91.3 billion from last year to Rmb412 billion, while new loans and total assets increased 66.77% year-on-year to Rmb154.6 billion and 16.5% to Rmb610 billion respectively.

China’s Reliance on Foreign Trade Rises to 60%

Separately, the online edition reported today that the National Bureau of Statistics contends that the country’s reliance on foreign trade now exceeds 60%, a development that has made China responsive to price fluctuations of crude oil and iron ore on the international market.

China imports close to 50% of its crude oil consumption and had to freeze the prices of petroleum products in order to contain rising inflation and that has caused losses in the refining sector that are now reaching Rmb50 billion or $7.6 billion for the year. In addition, China imports nearly 50% of its iron ore needs to meet steel industry demand. Iron ore prices have risen more than 200% in the last four years and were up 65% in the current year.

China’s factory price index has hovered above 8% for the last four months of shipment and is likely to contribute to higher consumer prices for the rest of the year.

Gainers & Losers

Financial stocks fell after earnings from HSBC failed to excite the market. The Bank of East Asia reported that the interim profit declined 52% to HK$894 million on losses of $167.8 million in credit market-related investments.

HSBC edged down 2.2% to HK$126.60, the Bank of East Asian plunged 8.3% to HK$33.20 and Hang Seng Bank fell 0.6% to HK$ 154.50 after Morgan Stanley slashed its price estimate on the stock.

Oil producers also fell as crude oil prices for September delivery fell 3% to $121.41 per barrel. PetroChina Co dropped 2.5% to HK$10.16 and CNOOC tumbled 6.3% to HK$10.80.

Other commodity stocks also fell as metal prices retreated. China Coal Energy slipped 6.9% to HK$12.60 and China Shenhua Energy Co. declined 8.9% to HK$2.50.

China Resources Land Ltd. also fell 8.6% to HK$9.30.

Utilities company Hong Kong Electric Holdings Ltd. increased 1.2% to HK$46.45 after the company reported that interim profit for the period ended June 30 gained 18% to HK$3.17 billion.

Rongsheng Shipbuilding in Tie-Up with Vale

CVRD or popularly known as Vale, largest iron ore mining company based in Brazil reported yesterday that it has entered into a tie-up with Rongsheng Shipbuilding Heavy Industries worth to build 12 large iron ore carriers worth $1.6 billion. The ships will have an estimated capacity of 30.2 million metric tons of iron ore.