Stronger Earnings at China Banks

Darlington Musarurwa
30 Oct, 2009
New York City

Stocks in Shanghai and Hong Kong surged on the back of a rally in New York and Europe. Markets in Asia closed higher. Stronger than expected earnings at banks bolstered the sentiment and loans surge. Vice Premier Li Keqiang said that the economy is expected to rise 8% in the current year.

[R]6:00 AM New York, 6:00 PM Hong Kong – Stocks in Shanghai and Hong Kong surged on the back of a rally in New York and Europe. Markets in Asia closed higher. Stronger than expected earnings at banks bolstered the sentiment and loans surge. Vice Premier Li Keqiang said that the economy is expected to rise 8% in the current year.[/R]

China and Hong Kong stocks gained on a spate of positive earnings from banks.

In Hong Kong trading Hang Seng Index increased 2.3% or 487.88 to 21,752.87, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, gained 2.4% or 54.46 to 2,322.21. In Shanghai trading, CSI 300 Index rose 1% or 33.32 to 3,280.37.

Daily turnover on main-board declined to HK$76.35 billion from HK$80.81 billion yesterday.

ChiNext Begins Trading

Xinhua News Agency reported today China’s Nasdaq-modeled market, ChiNext, debuted today on the Shenzhen-based exchange.

According to the report, 28 small and medium sized enterprises began trading today.

ChiNext is expected to provide fundraising avenues for small and medium-sized high tech businesses.

China’s Economy to Gain Momentum

Bloomberg News reported that China’s Vice Premier Li Keqiang said today in Sydney the country’s economy is gaining momentum and is expected to rise to 8% this year.

The economy is growing on the back of a Rmb4 trillion stimulus package unveiled by Beijing to nudge the economy into growth.

“We have already witnessed better performance trends in the Chinese economy. The economy of China has been enjoying better momentum with each passing quarter,” said Li.

Gainers & Losers

Hong Kong stocks rose buoyed by financial stocks on strong quarterly earnings and commitment by Peoples’ Bank of China governor Zhou Xiaochuan the central bank will maintain its loose monetary policy stance.

Industrial & Commercial Bank of China gained 3.5% after reporting net income in the quarter ended September 30 rose 19% to Rmb33.6 billion.

Bank of China advanced 2.3% after announcing profit rose 18.8% to Rmb21.1 billion.

China Merchants jumped 4% ahead of its earnings report. However, the lender announced after markets close that third quarter net income fell 16% to Rmb4.8 billion.

Henderson Land increased 7.5% after announcing to pay a HK$9.6 billion land premium.

Sun Hung Kai Property edged up 6.4%.

China Resources Enterprise Holdings climbed 8.6% and CNOOC Ltd. jumped 4.5%.

Tsingtao Brewery rose 3.6% after reporting its net profit increased 93% in the September quarter.

China''s Baoshan Iron and Steel increased 1.3% after profit in the three months ended September 30 rose 6.7%.

Earnings Review

Industrial and Commercial Bank of China Limited, the commercial bank reported third quarter net interest income fell 4.3% to Rmb 62.2 billion from Rmb 65 billion a year ago. Net profit in the quarter rose 19% to Rmb 33.8 billion or Rmb 0.10 per diluted share compared to net profit of Rmb 28.2 billion or Rmb 0.09 per share a year ago.

Industrial and Commercial Bank of China Limited, in the last one year traded as high as Rmb 6.52 in October 2009 and as low as Rmb 2.99 in March 2009. Based on the yesterday’s closing price of Rmb 6.27 the company has market cap of Rmb 2.09 trillion.

Sinopec Shanghai Petrochemical Company Limited, the fuel producer ethylene manufacturer reported third quarter revenues fell 23% to Rmb 13.06 billion from Rmb 16.96 billion a year ago. Net profit in the quarter was Rmb 550.6 million or Rmb 0.076 per diluted share compared to net loss of Rmb 2.31 billion or Rmb 0.320 per share a year ago.

Sinopec Shanghai Petrochemical Company Limited, in the last one year traded as high as Rmb 4.13 in August 2009 and as low as Rmb 1.20 in November 2008. Based on the yesterday’s closing price of Rmb 3.21 the company has market cap of Rmb 23.11 billion.