China Business Activities Show Moderate Expansion, ICBC and Agriculture Bank Report Declining Earnings

Li Chen
30 Apr, 2024
Hong Kong

Market indexes in Shanghai struggled, the Chinese yuan retained a downward bias, and the yield on the Chinese government bond hovered and approached a record high. 

China's manufacturing and service activity growth moderated, according to a private and government survey released on Tuesday. 

The government's survey includes a sample of state-owned companies. 

The official manufacturing purchasing managers' index decreased to 50.4 in April from a one-year high of 50.8 in March, the National Bureau of Statistics reported Tuesday. 

The official non-manufacturing PMI fell to a three-month low of 51.2 in April from 52.0 in March, the statistical bureau reported in a separate report Tuesday. 

The private survey of the manufacturing industry, which tracks a larger segment of private companies active in exports and international trade, showed expansion. 

The Caixin China General Manufacturing PMI increased to 51.4 in April from 51.1 in March, S&P Global reported Tuesday. 

The CSI 300 index decreased 0.2% to 3,616.76, and the Hang Seng Index advanced 0.1% to 17,770.43. 

Financial markets are closed on Wednesday in Hong Kong for Labor Day, and markets in Shanghai are closed for the rest of the week.

The Hang Seng index jumped the most among its global peers, as the index rebounded after state-controlled entities stepped up buying activities following a string of positive earnings. 

Haier Smart Home jumped 7.2% to HK$29.05 after the home appliance maker reported a 20% surge in profit in the March quarter. 

Industrial and Commercial Bank of China, ICBC, decreased 0.4% to HK$4.22 after the largest Chinese bank reported March quarter net income declined 2.8% to 87.7 billion yuan, or $12.1 billion. 

The net interest margin narrowed to 1.48% from 1.63% in the previous quarter ending in December 2023. 

Agriculture Bank of China fell 1.5% to HK$3.53 after the bank reported its first profit decline in a year. 

Net income fell 1.6% to 70.4 billion yuan, or just under $10 billion; the net interest margin shrank to 1.44% from 1.6%; and the non-performing loan ratio decreased to 1.32%. 

State-controlled banks are likely to face smaller net interest margin after as the government is likely to demand banks to increase lending to  large and state-owned developers. 

Moreover, banks earnings are likely to face significant headwinds as banks book larger losses amid a protracted property market slump. 

 

Asian Markets Extend a 2-Day Rally 

Across Asia, markets advanced, and the Nikkei 225 Stock Average in Tokyo soared 1.4% after investors returned from a three-day weekend. 

The Japanese yen was in focus, and the embattled currency rebounded to 156.80 against the U.S. dollar after crossing the 160-mark on the presumed market intervention by Japanese authorities. 

Market indexes in Seoul and Sydney advanced between 0.2% and 0.5%.