[R]6:00AM New York, 6:00PM Hong Kong – China automobiles and commercial vehicles sales surge in May and for the year after the government offered tax rebates. China also boosted tax incentives to exporters of electronics and other products. Financials rallied on media speculation of a merger between Ping An and Shenzhen Development Bank.[/R]

Stocks struggled in a directionless market as uncertainty prevailed after data from the U.S. Labor Department showed that payrolls declined but unemployment surged to 25-year high.

Investors also locked in gains ahead of key economic data from both the U.S. and China.

However Shanghai stocks rose marginally spurred by financial stocks on news of a possible tie-up between Ping An Insurance and Shenzhen Development Bank.

In Hong Kong trading the Hang Seng Index fell 2.3% or 426.14 to 18,253.39, and the China Enterprises Index of Hong-Kong listed mainland shares, or H shares, dropped 1.8% or 194.17 to 10,667.88. In Shanghai trading CSI 300 Index gained 0.3% or 194.17 to 10,667.88.

China Association of Automobile Manufacturers reported sales of passenger vehicles in May increased 47% to 829,100 and 34% to 1.12 million including trucks and commercial vehicles.

For the five months ending in May, sales increased 14% to 4.96 million units exceeding the U.S. sales of 3.96 million in the period.

China Increases Tax Rebates

Ministry of Finance in China today increased tax rebates for the seventh time since August last year on more than 2,600 items such shoes, hats, toys and processed farm products effective June 1 to boost exports.

Rebates on sewing machines and TV transmitters were raised to 17%, while tax rebates on canned food, juice, shoes, hats and toys were 15%. After the review, the overall tax rebate now stands at 12.4%.

PSBC Extends Rmb70 billion to SMEs

Xinhua News Agency reported today that Postal Savings Bank of China governor Tao Liming said yesterday the bank has extended Rmb70 billion in loans to small and medium-sized enterprises since June last year.

PSBC lent Rmb300 million to Rmb400 million on average every day to small and medium-sized enterprises, and total credit is forecasted to surpass Rmb100 billion at the end of the year. The loans to small and medium-sized companies require no collateral.


The maximum loan for small business owners is Rmb100,000 and for medium-sized firms is Rmb3 million.

Gainers & Losers

Li & Fung fell 5.2%.

Property stocks rose. China Vanke, the biggest listed property developer in China, jumped 4.2% after reporting property sales rose 19.7% to Rmb6.41 billion in May from the same period a year earlier.

China Overseas Land advanced 2% to HK$16.42 as sales edged up 113.9% to HK$5.65 billion from a year ago in May.

Greentown China increased 3.6% to HK$10.30 after last month’s property sales climbed 193%.