BLBG: China Stocks Gain to 4-Month High on Government Stimulus Report
China’s stocks rose to the highest in four months on expectations stimulus measures will revive growth in the world’s third-largest economy.
Industrial & Commercial Bank of China Ltd., the nation’s biggest listed lender, added 2.4 percent and China Merchants Bank Co. climbed 3.5 percent after the China Securities Journal said Chinese banks advanced record new loans last month, prompted by the government. China Eastern Airlines Corp. advanced 2.1 percent as the new management said it will limit expansion to narrow its loss “significantly” this year.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 35.98, or 1.8 percent, to 2,096.79 as of the 11:30 a.m. local-time break, set for the highest since Oct. 7. The CSI 300 Index, measuring the exchanges in Shanghai and Shenzhen, gained 1.8 percent to 2,146.66.
“Sentiment is quite strong as investors are betting that these stimulus plans put in place will turn things around,” said Yan Ji, an investment manager at HSBC Jintrust Fund Management Co. in Shanghai, which manages the equivalent of about $850 million. Yan said he’s buying financial stocks and companies in industries targeted by the government’s stimulus plans.
The Shanghai Composite Index, the world’s second-best performer this year, has rebounded 20 percent since the government pledged 4 trillion yuan ($584 billion) of spending to revive economic growth. The central bank has also cut the key lending rate five times since September to support industries and stem job losses.
The government started investing its second allocation of funds from the stimulus package, Xinhua News Agency reported yesterday. It invested 130 billion yuan, its second injection after 100 billion yuan of funds in the fourth quarter, it said.
Lending Targets
The country will offer financial support to shipbuilders and encourage domestic shipping lines to use made-in-China vessels, Shanghai Securities News said. The government may also offer tax rebates to companies that sell vessels to overseas shipping lines, it said.
A stimulus plan for the textile and machinery industries will be submitted to the Cabinet today, Shanghai Securities News said yesterday. The government said Jan. 14 it would cut taxes and offer subsidies for the auto and steel industries.
Industrial & Commercial Bank rose 2.4 percent to 3.82 yuan. China Construction Bank Corp., the country’s second-largest bank, added 2.2 percent to 4.17 yuan. China Merchants Bank Co., the nation’s biggest dual-currency credit-card issuer, climbed 3.5 percent to 14.39 yuan. Shenzhen Development Bank Co., controlled by buyout firm TPG Inc., advanced 7.1 percent to 12.80 yuan.
Chinese banks may have offered a record 1.2 trillion yuan of new loans in January, the China Securities Journal reported, citing people it didn’t identify.
Bank Lending
The four biggest state-owned banks completed 20 percent of their full-year target, with the majority of the loans lent for railways, highways, electricity grids and the infrastructure, the report said. Chinese banks tend to frontload their lending at the beginning of the year to ease operating pressure, it said.
China Eastern rose 2.1 percent to 4.92 yuan. The company expects to break even next year and to post a profit in 2011, Liu Shaoyong told reporters yesterday in Shanghai after being appointed as the company’s chairman. The airline will only accept 13 new planes this year, down from a previously planned 29, added new President Ma Xulun.
The airline has drawn up 256 cost-cutting measures and it aims to pare spending by 3 billion yuan ($439 million) this year, Liu added. China’s government moved Liu to the carrier from China Southern Airlines Co. and agreed to a 7 billion yuan bailout as the company struggles with debts and fuel-hedging losses.
The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.
Maanshan Iron & Steel Co. (600808 CH), China’s fourth- largest listed steelmaker, added 0.05 yuan, or 1.4 percent to 3.68. The company was raised to “buy” from “sell” at UBS AG after the broker said it changed the way it valued the stock.
Ping An Insurance (Group) Co. (601318 CH), China’s second- biggest insurer, added 0.99 yuan, or 3.3 percent, to 31.10. Ping An plans to vote against BNP Paribas SA’s revised bid for some of Fortis’s units, saying the improved terms aren’t sufficient.
Shanghai Zhenhua Port Machinery Co. (600320 CH), the world’s biggest maker of container cranes, rose 0.14 yuan, or 1.5 percent, to 9.67. Zhenhua Port said it received regulatory approval to issue 3 billion yuan ($439 million) worth of shares to buy a factory and an office building from its parent.
Suzhou Industrial Park New Sea Union Telecom Development Co. (002089 CH), a manufacturer of telecommunication products, jumped 0.72 yuan, or the 10 percent daily limit, to 7.96. The company was given a “buy” rating in new coverage at Shenyin & Wanguo Securities Co., citing the development of high-speed mobile-phone services, or so-called 3G, will increase demand for the company’s products. The brokerage had a six-month price target of 13 yuan to 15 yuan.
