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China’s Stocks Rise, Paring Third Weekly Decline on ICBC Profit
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By Bloomberg News
Aug. 21 (Bloomberg) -- China’s stocks rose for a second day, led by banks after Industrial & Commercial Bank of China Ltd. posted higher-than-estimated second-quarter profit.
Industrial & Commercial Bank, the nation’s biggest listed lender, added 2.3 percent. Bank of China Ltd. gained 1.2 percent while Bank of Beijing Co. climbed 3.5 percent. Jinduicheng Molybdenum Co., Asia’s largest producer of the metal used to harden steel, dropped 2.5 percent after first-half profit fell.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 48.66, or 1.7 percent, to 2,960.24 as of 10:53 a.m. local time. The advance pared its third straight weekly loss to 3.1 percent, two days after the measure briefly dipped more than 20 percent below its Aug. 4 high, the threshold for a bear market.
“You should be able to see them retrace back to 10 days ago, and you should see them go higher than that,” Hugh Simon, who helps manage the $972 million Dreyfus Premier Greater China Fund at Hamon Investment Group in Hong Kong, said in a Bloomberg Television interview. “I believe that earnings will come through in the next six to nine months, which will allow stocks to perform.”
The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, added 2.2 percent to 3,212.54.
Industrial & Commercial Bank rose 2.3 percent to 4.86 yuan. Net income was 31.3 billion yuan ($4.6 billion) on record credit growth and lower provisions for bad loans as the economy rebounded, beating the 30.7 billion yuan average estimate of 11 analysts surveyed by Bloomberg.
Bank of China gained 1.2 percent to 4.07 yuan while Bank of Beijing advanced 3.5 percent to 16.10 yuan.
Molybdenum
Jinduicheng Molybdenum fell 2.5 percent to 19.30 yuan after saying first-half profit fell 88 percent to 201.2 million yuan as a drop in demand led to lower prices. Jiangxi Copper fell 2.2 percent to 35.91 yuan as the price of the metal dropped 0.6 percent in New York yesterday.
China’s stocks may rise, driving the Shanghai Composite Index past 4,000 over the next 12 months, as the world’s third- largest economy revives, Morgan Stanley said.
“It’s still a bull market,” Morgan Stanley’s Hong Kong- based strategist Jerry Lou told Bloomberg Television in Shanghai today. “The recovery is real. I think at least for the next 12 months the momentum is very good.” Corporate earnings may gain 15 percent this year and about 20 percent in 2010, he said.
--Zhang Shidong. Editor: Linus Chua, Reinie Booysen
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-7014 or szhang5@bloomberg.net Last Updated: August 20, 2009 22:57 EDT
China Stocks Set to Rebound From Slump, Merrill Says (Update1)
By Bloomberg News
Aug. 20 (Bloomberg) -- China’s stocks are set to rebound from this month’s plunge on prospects earnings will beat estimates and policy makers will maintain bank lending, Bank of America Corp.’s Merrill Lynch unit said.
The Shanghai Composite Index climbed 2.7 percent to 2,860.97 at 10:12 a.m. local time. The gauge yesterday fell 19.8 percent below the high on Aug. 4, near the 20 percent bear- market threshold, amid disappointing earnings and concern the government will seek to damp property speculation.
“I don’t think this is a turning point,” David Cui, China strategist at Merrill Lynch, said in a phone interview yesterday. “My sense is that earnings will surprise on the upside and we’ll see a round of earnings upgrades. The government’s monetary policy also hasn’t changed.”
Cui’s view is shared by U.S. fund managers Uri Landesman of ING Investment Management Inc. and Sentinel Asset Management’s Kate Schapiro, who say the stock selloff won’t prompt them to cut their investments in the world’s third-largest economy.
“If you were to put a gun to my head, I would say that China is a buy, not a sell,” said Landesman, who manages $2.5 billion at ING Investment in New York. “China has always been a volatile place and that hasn’t changed in the last few weeks.” Landesman said he’s considering adding to his China holdings.
The stocks will rebound because they were “oversold” and valuations are reasonable, leaving a “safety margin,” analysts led by Yu Jun at Citic Securities Co., the country’s biggest listed brokerage, wrote in a report today. Equities on the CSI 300 Index have dropped to 21 times estimated earnings for 2009 from 27 times on Aug. 3.
Stimulus Rally
China’s benchmark stock index posted the biggest gains among the world’s markets from Jan. 1 to Aug. 4, more than doubling from the low in November. Shares had surged as the government unveiled a 4 trillion yuan ($585 billion) stimulus package and new loans by banks surged to a record in the first half. The gauge remains 53 percent below the all-time high on Oct. 16, 2007.
The index has slumped this month, paring the year-to-date advance to 57 percent, after new lending in July tumbled to less than a quarter of June’s level, while losses at Yunnan Copper Industry Co. and Maanshan Iron & Steel Co. revived concern that earnings will deteriorate.
The equities rally also faltered as the securities regulator allowed initial public offerings after a nine-month moratorium.
The stocks probably face a further “correction” in the next 30 days due to regulatory risks, UBS AG strategist John Tang said in a report today, advising investors to be “less aggressive for now, more aggressive” later.
State Construction
Jonathan Garner, chief Asian and emerging market strategist at Morgan Stanley in London, told Bloomberg Television that the main catalyst for the recent plunge was the July IPO of China State Construction Engineering Corp.
“It drained liquidity from secondary markets,” he said.
China Everbright Securities Co. yesterday underscored the downturn, slumping by the 10 percent daily limit, a day after it had the smallest debut of any new stock in Shanghai this year. Shanghai-based Everbright rose 30 percent on Aug. 18, against an average 109 percent for the seven other companies to list shares in China since the moratorium ended last month.
“The next few days are key,” said Cui at Merrill Lynch, who favors shares of property developers, coal and non-ferrous metals producers. “We may see another leg down if the market doesn’t hold around the 2,800 level.”
China’s biggest state-owned banks such as Industrial & Commercial Bank of China Ltd. are scheduled to report their half-yearly results within this fortnight.
Policy Stance
Shanghai’s index has extended its decline since Prime Minister Wen Jiabao said on Aug. 9 that the government will maintain its current macroeconomic policy stance aimed at bolstering domestic spending as the nation continues to experience fallout from the global recession.
The index is trading at 30.6 times reported earnings, against 17.8 times for the MSCI Emerging Markets Index, and remains 53 percent higher than at the start of this year.
“I think it’s healthy for the market to back off a bit,” said Schapiro, fund manager at San Francisco-based Sentinel, with $17 billion in assets. “Over the next 12 months or so I think we’re in a period of time where China’s growth is still going to be the fastest of the major countries of the world. Even without a pickup in their export sector, they can probably grow at around 8 or 9 percent.”
Technical Signals
The Shanghai Composite is poised to rally and global equities may follow suit, according to Richard Ross, global technical strategist at New York-based Auerbach Grayson & Co. Charts shows four levels of “support” signaling that the index may rebound: the 38.2 percent Fibonacci retracement, the 200-day exponential moving average, the trend line since mid-January and the 14-day relative strength index.
“A rebound is in the cards,” said Ross.
Stocks plunged the most in eight months on July 29 on speculation the government will curb inflows into the market. Beijing-based Caijing magazine reported that day speculation the central bank was poised to order lenders to set aside larger reserves. Market News International said Chinese equities fell that day on speculation regulators will increase a tax on stock trading.
“The Chinese market is very trend-oriented because there are many individual investors,” said Philippe Zhang, chief investment officer at AXA SPDB Investment Managers in Shanghai, which oversees about $220 million. “So it can rally very quickly and go down strongly as well.”
New Accounts
Investors opened 484,185 accounts to trade stocks last week, the slowest pace since the five days ended July 10, according to data from the nation’s clearing house. Account openings peaked this year at 700,617 in the last week of July, days before the index reached this year’s high, the data shows.
“It’s scary,” retiree Xu Xuehong, 64, who had about 300,000 yuan ($43,900) invested in shares, said in an interview at a branch of Shenyin & Wanguo Securities Co. in Shanghai. “The decline is too rapid; I am not going to make new investments.”
China’s CSI 300 index, measuring exchanges in Shanghai and Shenzhen, has fallen more than 20 percent five times since 2005, with the index plunging by 33 percent and lasting almost three months on average during the bear markets, according to Birinyi Associates Inc. The index fell 5 percent to 3,014.47 yesterday, down 20 percent since Aug. 4.
“The speed of this drop stands out,” said Kevin Pleines, analyst for the Westport Connecticut-based research and money management firm. “If this decline follows the average, it will take the CSI down another 486 points to 2,527.”
To contact the Bloomberg News staff for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net Last Updated: August 19, 2009 22:17 EDT
By Bloomberg News
Aug. 20 (Bloomberg) -- China’s stocks are set to rebound from this month’s plunge on prospects earnings will beat estimates and policy makers will maintain bank lending, Bank of America Corp.’s Merrill Lynch unit said.
The Shanghai Composite Index climbed 2.7 percent to 2,860.97 at 10:12 a.m. local time. The gauge yesterday fell 19.8 percent below the high on Aug. 4, near the 20 percent bear- market threshold, amid disappointing earnings and concern the government will seek to damp property speculation.
“I don’t think this is a turning point,” David Cui, China strategist at Merrill Lynch, said in a phone interview yesterday. “My sense is that earnings will surprise on the upside and we’ll see a round of earnings upgrades. The government’s monetary policy also hasn’t changed.”
Cui’s view is shared by U.S. fund managers Uri Landesman of ING Investment Management Inc. and Sentinel Asset Management’s Kate Schapiro, who say the stock selloff won’t prompt them to cut their investments in the world’s third-largest economy.
“If you were to put a gun to my head, I would say that China is a buy, not a sell,” said Landesman, who manages $2.5 billion at ING Investment in New York. “China has always been a volatile place and that hasn’t changed in the last few weeks.” Landesman said he’s considering adding to his China holdings.
The stocks will rebound because they were “oversold” and valuations are reasonable, leaving a “safety margin,” analysts led by Yu Jun at Citic Securities Co., the country’s biggest listed brokerage, wrote in a report today. Equities on the CSI 300 Index have dropped to 21 times estimated earnings for 2009 from 27 times on Aug. 3.
Stimulus Rally
China’s benchmark stock index posted the biggest gains among the world’s markets from Jan. 1 to Aug. 4, more than doubling from the low in November. Shares had surged as the government unveiled a 4 trillion yuan ($585 billion) stimulus package and new loans by banks surged to a record in the first half. The gauge remains 53 percent below the all-time high on Oct. 16, 2007.
The index has slumped this month, paring the year-to-date advance to 57 percent, after new lending in July tumbled to less than a quarter of June’s level, while losses at Yunnan Copper Industry Co. and Maanshan Iron & Steel Co. revived concern that earnings will deteriorate.
The equities rally also faltered as the securities regulator allowed initial public offerings after a nine-month moratorium.
The stocks probably face a further “correction” in the next 30 days due to regulatory risks, UBS AG strategist John Tang said in a report today, advising investors to be “less aggressive for now, more aggressive” later.
State Construction
Jonathan Garner, chief Asian and emerging market strategist at Morgan Stanley in London, told Bloomberg Television that the main catalyst for the recent plunge was the July IPO of China State Construction Engineering Corp.
“It drained liquidity from secondary markets,” he said.
China Everbright Securities Co. yesterday underscored the downturn, slumping by the 10 percent daily limit, a day after it had the smallest debut of any new stock in Shanghai this year. Shanghai-based Everbright rose 30 percent on Aug. 18, against an average 109 percent for the seven other companies to list shares in China since the moratorium ended last month.
“The next few days are key,” said Cui at Merrill Lynch, who favors shares of property developers, coal and non-ferrous metals producers. “We may see another leg down if the market doesn’t hold around the 2,800 level.”
China’s biggest state-owned banks such as Industrial & Commercial Bank of China Ltd. are scheduled to report their half-yearly results within this fortnight.
Policy Stance
Shanghai’s index has extended its decline since Prime Minister Wen Jiabao said on Aug. 9 that the government will maintain its current macroeconomic policy stance aimed at bolstering domestic spending as the nation continues to experience fallout from the global recession.
The index is trading at 30.6 times reported earnings, against 17.8 times for the MSCI Emerging Markets Index, and remains 53 percent higher than at the start of this year.
“I think it’s healthy for the market to back off a bit,” said Schapiro, fund manager at San Francisco-based Sentinel, with $17 billion in assets. “Over the next 12 months or so I think we’re in a period of time where China’s growth is still going to be the fastest of the major countries of the world. Even without a pickup in their export sector, they can probably grow at around 8 or 9 percent.”
Technical Signals
The Shanghai Composite is poised to rally and global equities may follow suit, according to Richard Ross, global technical strategist at New York-based Auerbach Grayson & Co. Charts shows four levels of “support” signaling that the index may rebound: the 38.2 percent Fibonacci retracement, the 200-day exponential moving average, the trend line since mid-January and the 14-day relative strength index.
“A rebound is in the cards,” said Ross.
Stocks plunged the most in eight months on July 29 on speculation the government will curb inflows into the market. Beijing-based Caijing magazine reported that day speculation the central bank was poised to order lenders to set aside larger reserves. Market News International said Chinese equities fell that day on speculation regulators will increase a tax on stock trading.
“The Chinese market is very trend-oriented because there are many individual investors,” said Philippe Zhang, chief investment officer at AXA SPDB Investment Managers in Shanghai, which oversees about $220 million. “So it can rally very quickly and go down strongly as well.”
New Accounts
Investors opened 484,185 accounts to trade stocks last week, the slowest pace since the five days ended July 10, according to data from the nation’s clearing house. Account openings peaked this year at 700,617 in the last week of July, days before the index reached this year’s high, the data shows.
“It’s scary,” retiree Xu Xuehong, 64, who had about 300,000 yuan ($43,900) invested in shares, said in an interview at a branch of Shenyin & Wanguo Securities Co. in Shanghai. “The decline is too rapid; I am not going to make new investments.”
China’s CSI 300 index, measuring exchanges in Shanghai and Shenzhen, has fallen more than 20 percent five times since 2005, with the index plunging by 33 percent and lasting almost three months on average during the bear markets, according to Birinyi Associates Inc. The index fell 5 percent to 3,014.47 yesterday, down 20 percent since Aug. 4.
“The speed of this drop stands out,” said Kevin Pleines, analyst for the Westport Connecticut-based research and money management firm. “If this decline follows the average, it will take the CSI down another 486 points to 2,527.”
To contact the Bloomberg News staff for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net Last Updated: August 19, 2009 22:17 EDT
"V" shape economic and stock market recovery particularly to PRC SSE index surpassing 6000 is confirmed!!!
richtan ( Date: 11-Aug-2009 11:14) Posted:
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China’s Industrial Output Growth Accelerates on Record Loans
By Bloomberg News
Aug. 11 (Bloomberg) -- China’s industrial output growth accelerated on record loans and stimulus spending.
Industrial production climbed 10.8 percent in July from a year earlier after a 10.7 percent advance in June. Urban fixed- asset investment for the seven months to July 31 rose 32.9 percent. Consumer prices fell 1.8 percent last month. The statistics bureau released the figures at a briefing today in Beijing.
China’s economy will grow 9.4 percent this year, topping the government’s 8 percent target, Goldman Sachs Group Inc. said yesterday. Policy makers are wrestling with how to avert property and stock bubbles and bad loans after first-half lending tripled to $1.1 trillion as banks backed the government’s stimulus package.
“A lot of officials fear a significant slowdown if they withdraw stimulus too early,” said Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong. The government will “fine tune” monetary policy in the short term by selling central bank bills to mop up excess liquidity, and guiding loan growth, Ma said.
Interest-rate increases and lending quotas are not likely until there are “more serious signals of inflation and overheating,” he added.
The gain in industrial output was less than the 11.5 percent median estimate of 23 economists.
Retail Sales
The rise in urban fixed-asset investment compared with a 33.6 percent gain through June and a 34 percent median estimate. Retail sales rose 15.2 percent in July, more than the 15 percent expansion in June.
Producer prices dropped a record 8.2 percent, compared with a 7.8 percent fall in the previous month.
The credit boom and a 4 trillion yuan ($585 billion) stimulus package drove an acceleration to 7.9 percent economic growth in the second quarter from a year earlier and helped General Motors Co. to report a 78 percent increase in vehicle sales in China in July.
Infrastructure spending also aids companies including BBMG Corp., Beijing’s biggest cement supplier, which saw its shares surge 56 percent on its first day of trading in Hong Kong on July 29 on expectations China’s stimulus will spur asset investments and housing demand.
The Shanghai Composite Index has rallied almost 80 percent in 2009 and real-estate prices have rebounded, fueling concern that loans meant for infrastructure projects are being used for speculation. The measure fell by the most in eight months on July 29 amid concern that the central bank would rein in liquidity.
The central bank said Aug. 5 that it will use “dynamic fine-tuning” and guide “appropriate” lending growth.
China will maintain its current macroeconomic policy stance aimed at bolstering domestic spending as the nation continues to face difficulties including an export slump and industrial overcapacity, Premier Wen Jiabao said Aug. 9.
To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net; Last Updated: August 10, 2009 22:00 EDT
By Bloomberg News
Aug. 11 (Bloomberg) -- China’s industrial output growth accelerated on record loans and stimulus spending.
Industrial production climbed 10.8 percent in July from a year earlier after a 10.7 percent advance in June. Urban fixed- asset investment for the seven months to July 31 rose 32.9 percent. Consumer prices fell 1.8 percent last month. The statistics bureau released the figures at a briefing today in Beijing.
China’s economy will grow 9.4 percent this year, topping the government’s 8 percent target, Goldman Sachs Group Inc. said yesterday. Policy makers are wrestling with how to avert property and stock bubbles and bad loans after first-half lending tripled to $1.1 trillion as banks backed the government’s stimulus package.
“A lot of officials fear a significant slowdown if they withdraw stimulus too early,” said Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong. The government will “fine tune” monetary policy in the short term by selling central bank bills to mop up excess liquidity, and guiding loan growth, Ma said.
Interest-rate increases and lending quotas are not likely until there are “more serious signals of inflation and overheating,” he added.
The gain in industrial output was less than the 11.5 percent median estimate of 23 economists.
Retail Sales
The rise in urban fixed-asset investment compared with a 33.6 percent gain through June and a 34 percent median estimate. Retail sales rose 15.2 percent in July, more than the 15 percent expansion in June.
Producer prices dropped a record 8.2 percent, compared with a 7.8 percent fall in the previous month.
The credit boom and a 4 trillion yuan ($585 billion) stimulus package drove an acceleration to 7.9 percent economic growth in the second quarter from a year earlier and helped General Motors Co. to report a 78 percent increase in vehicle sales in China in July.
Infrastructure spending also aids companies including BBMG Corp., Beijing’s biggest cement supplier, which saw its shares surge 56 percent on its first day of trading in Hong Kong on July 29 on expectations China’s stimulus will spur asset investments and housing demand.
The Shanghai Composite Index has rallied almost 80 percent in 2009 and real-estate prices have rebounded, fueling concern that loans meant for infrastructure projects are being used for speculation. The measure fell by the most in eight months on July 29 amid concern that the central bank would rein in liquidity.
The central bank said Aug. 5 that it will use “dynamic fine-tuning” and guide “appropriate” lending growth.
China will maintain its current macroeconomic policy stance aimed at bolstering domestic spending as the nation continues to face difficulties including an export slump and industrial overcapacity, Premier Wen Jiabao said Aug. 9.
To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing at khamlin@bloomberg.net; Last Updated: August 10, 2009 22:00 EDT
Good news for infrastructure stock like Midas:
China Will Maintain Stimulatory Policies, Wen Says (Update1)
By Bloomberg News
Aug. 9 (Bloomberg) -- China will maintain its current macroeconomic policy stance aimed at bolstering domestic spending as the nation continues to experience fallout from the global recession, Premier Wen Jiabao said.
The effect of some of China’s stimulus policies will weaken over time, and the economy is still under pressure from declining demand for exports, Wen said in a statement on the central government’s Web site today.
China’s 4 trillion yuan ($586 billion) stimulus plan, which is funding the construction of roads, railways and airports, coupled with record lending helped the economy recover in the second quarter from the slowest growth rate in almost a decade. Government spending and the credit boom have countered a collapse in trade and aided global businesses from Semiconductor Manufacturing International Corp. to General Motors Co.
“The reason that we are sticking to the proactive fiscal policy and moderately loose monetary policy is because we are facing many difficulties and challenges,” Wen said. The comments were made during a three-day trip to east China’s Jiangsu province that ends today.
The world’s third-biggest economy expanded 7.9 percent in the second quarter from a year earlier, accelerating from a 6.1 percent pace in the first three months of 2009. In contrast, exports fell for an eighth month in June as the global recession cut demand, highlighting the economy’s dependence on stimulus spending to revive growth.
Official View
Today’s statement by Wen follows comments by three economic officials at a joint press conference two days ago, and may help to ease concern that China could remove stimulus efforts adopted last year amid a rebound in stock and property prices and a surge in lending. The Shanghai Composite Index of shares has climbed 79 percent this year.
Zhu Zhixin, vice chairman of the National Development and Reform Commission, said domestic demand in China is still weak and consumption is dependent on government stimulus. The People’s Bank of China doesn’t see any inflationary pressure in the economy and assets prices are not a factor taken into consideration when setting policies, deputy governor Su Ning said at the same briefing.
“The main message is the government will keep the policy stance loose, at least for now,” Goldman Sachs Group Inc. economists Yu Song and Helen Qiao wrote in a report dated Aug. 7.
“This should clear the recent confusions in the market about the government’s policy stance and preclude the possibilities of hikes to interest rates, reserve requirement ratios in the near term,” they wrote.
China’s central bank has kept interest rates and reserve requirements for banks unchanged this year after cutting them in the final four months of last year to counter the effects of the global credit crisis. The People’s Bank of China, in an Aug. 5 statement, reiterated its pledge to keep the yuan stable at a “reasonable and balanced” level.
The central bank scrapped quotas limiting lending in November 2008 to support the government’s stimulus package.
--Zhang Dingmin. Editors: Victoria Batchelor, Alex Devine.
To contact the Bloomberg News staff for this story: Zhang Dingmin in Beijing at Dzhang14@bloomberg.net Last Updated: August 9, 2009 04:03 EDT