Political Tensions Heighten, Chinese Steel Maker Charged With Price Dumping
The third largest steel maker in China seems to be headlining news today following allegations that the company participated in price dumping in order to boost export in the US and gain significant market share. Deeming the notices as “unfair”, Wuhan Iron & Steel Co. is blaming global prices rather than corporate strategy in driving the volume of exports higher. “Chinese steel exports have soared because of higher global prices and demand”, according to the Company Secretary Zhao Hao. “Most of the Chinese steel products were sold in China, and only a small proportion are sold overseas.” The news comes as no surprise as previous sanctions, although not imposed by US policymakers, have cited steel makers as the next target following the recently imposed tariffs on coated paper products from the country. A clear example of the measures US Treasury Secretary Paulson noted earlier this week, further bantering and jawboning should be expected until further concessions are to be made by Chinese policy officials. The culmination of such measures will likely boost speculation in the Chinese yuan, with plenty of bidders smelling the sweet scents of revaluation. Incidentally, the market will, as a result, likely turn to the upcoming possibility of currency intervention by Treasury officials.
China?s Stock Market Remains Supported
Chinese shares advanced for the fourth straight day, rebounding back from massive declines last week. Supportive of today?s optimism was further speculation that the headline government would not allow massive declines in the stock market, along with notions that economic growth will more than bolster further gains. As a result, the benchmark CSI 300 equity index added 35.56 points to close at 3,837.87. Helping to spark the positive momentum were comments printed in the Shanghai Securities News. The outlet cited comments by State Council researcher Chen Daofu, stating that the country?s economic growth would be able to sustain share appreciation in the market. Notably, Ping An Insurance stock led advancers by rising 2.6 percent in session trading to close higher at 59.18 yuan.
Chinese Yuan Declines For First Weekly Loss
China?s local currency had the weakest close in almost three weeks today, following speculation that the country?s government will continue to promote a two way trade in the underlying currency. Although it has been conceded that the government will eventually allow the Chinese yuan to appreciate gradually, it is also understood that heads of state will also seek to partially stem rapid speculative forces in the market. The underlying idea is in line with recent comments by Zuo Xiaolei, chief economist at China Galaxy Securities Co. According to Zuo, “China is after a flexible exchange rate and wishes that the yuan not move in one direction”. As a result, the currency dropped 0.1 percent on the week, falling the most since April 13th against the US dollar to 7.6550. However, speculation does remain high in the market on the side of yuan bidding. Attributed to the notion were continued requests from US Treasury Secretary Paulson. Yesterday, the Secretary that has garnered the most attention in recent months, suggested that “there?s really more need to move the renminbi than in July 2005” as it is “strongly in their (Chinese officials) best interest to move”.
Asia Regional Stock Markets Continue To See Red
Regional stock markets declined on the session, countering the positive vibes in Shanghai. The Straits Times index slipped 49.19 points to close at 3,497.14, the biggest drop since mid April. Comparatively, the Hang Seng declined 117.69 to close 0.6 percent at 20,700.92.