6:00AM New York, 6:00PM Hong Kong - China’s domestic consumption contributed the most to the economic growth in 2007. CNOOC sets aside $5.24 billion capital expenditure.

Stocks fell in Hong Kong on profit taking ahead of the U.S. Federal Reserve decision on interest rates today and as chairman of Henderson Land Development Lee Shau-kee lowered his forecast for the rise in Hang Seng by 22%. Chairman Lee’s comments are widely followed by investors.

In Hong Kong trading Hang Seng Index dropped 2.6% or 638.11 at 23,653.69, while the China Enterprises index of H shares declined 4.7% or 623.77 to 12,755.41.

Daily turnover on main-board was HK$105.1 billion compared to HK$92.6 billion yesterday.

Xinhua News Agency reported today that National Bureau of Statistics spokesman Li Xiaochao announced in Beijing that consumer spending replaced investment as the largest contributor to the economic growth in 2007. Of the 11.4% annual rise in GDP, consumer spending contributed 4.4%, investments weighed in with 4.3% and net exports contributed 2.7%.

Consumer spending rose 16.8% to Rmb8.9 trillion in 2007.

Xiaochao said, “Our policy is to push up domestic consumption by raising the income of citizens, especially that of the low income group. And the figure shows the policy is beginning to yield results.”

The Standard online news reported today that Chairman of Henderson Development, who is considered as the “Godfather of Stocks”, has lowered his forecast for the rise in Hang Seng Index between 27,000 points to 30,000 by March and slow in the second quarter.

Insurance companies fell after Bear Stearns cut earnings forecast for insurance on volatile stocks in China. China Life declined 7.4% to HK$29 after the brokerage cut its rating to “underperform”, citing that returns on investment will slow to 7.7% this year from 11% in 2007.

Bear Stearns also said Ping An Insurance Company investment income will fall 20% from the previous estimate to Rmb41.9 billion.

Hong Kong Exchanges and Clearing slipped 6.4% to HK$166.5.

Steelmakers also plunged as the snowstorms have cut deliveries of fuel and coal. Angang fell 5.9% to HK$13.98 and Maanshan Iron & Steel Company tumbled 3.7% to HK$4.20.

CNOOC Limited declined 0.7% after reporting yesterday that the company is planning to spend $5.25 billion on capital expenditure projection. About $1 billion will be used for exploration and $4.1 billion will be earmarked for ten development projects.

Chief Financial Officer Yang Hua said the company will raise it production target between 195 and 199 million barrels of oil and gas equivalent this year, and added that the falling U.S. dollar and global inflation will impose challenge for the business.

Separately, China Petroleum & China Corporation said yesterday it will spend Rmb16 billion to expand plants in central China and double daily refining capacity at Changling refinery to 200,000 barrels by 2010.

ZTE Corporation rose 4% to HK$41.60 after Lehman Brothers Holdings raised its rating on the stock from “underweight” to “overweight”.

Hong Kong Electric gained 1% to HK$44.15. CLP Holdings 1.8% to HK$61.75 and China Oilfield Services Limited increased 6.3% to HK$13.


5:00AM New York, 7:00PM Tokyo – Japan forecasted manufacturing to fall 0.4% in January and 2.2% in February. Sumitomo Mitsui estimated 99 billion in subprime related losses.

Stocks in Japan reversed earlier gains in the morning session to close down after a government report showed December industrial production rose below market expectations.

In Tokyo trading Nikkei 225 fell from a 0.3% gain in the morning session to close down 0.99% or 133.83 to 13,345.03 while the broader Topix Index reversed a 0.8% gain to drop 0.7%to 1,320.11.