China stocks rise most in seven weeks, Jiangxi copper surges
Tuesday, 21 July 2009
BEIJING, July 20 (Bloomberg): China's stocks rose the most in seven weeks, led by commodities-related companies and insurers, on optimism record bank lending will revive the economy and boost earnings.
Jiangxi Copper Co. jumped by the daily 10 per cent limit and China Cosco Holdings Co., the world's largest operator of dry- bulk ships, soared 7.4 per cent as metal prices and freight rates rallied. China Life Insurance Co. climbed 8.1 per cent after regulators said insurers' profits may have doubled in six months.
The Shanghai Composite Index advanced 77.18, or 2.4 per cent, to 3,266.91 at the close, the most since June 1 and a 13-month high. The gauge has surged 79 per cent this year as banks tripled new loans to 7.37 trillion yuan ($1.1 trillion) in the first half from a year earlier and the government implemented a stimulus package. The CSI 300 Index, measuring Shanghai and Shenzhen exchanges, gained 2 per cent to 3,591.12.
"Investors still have high expectations about a fast economic recovery and corporate earnings improvement," said Zhang Ling, who helps oversee about $7.21 billion at ICBC Credit Suisse Asset Management Co. in Beijing. "Stocks are already expensive and the market is forming a bubble."
The benchmark index added 2.4 per cent last week, its fifth straight advance, as the country reported second-quarter economic growth of 7.9 per cent. The gains helped the stock market to briefly overtake Japan as the world's second largest by value. China's equity market may surpass the US in three years as state-owned companies sell new shares and the nation's 1.4 billion people put more money into stocks, Mark Mobius said.
"The Chinese population is just dipping its toe into equities and they've got a long way to go," Mobius, who oversees about $25 billion of emerging-market assets as executive chairman of Templeton Asset Management Ltd., said in an interview with Bloomberg Television in London on July 18.
Jiangxi Copper, the nation's biggest copper producer, surged 3.99 yuan to 43.90 yuan. The stock has rallied 340 per cent this year, making it the fifth biggest gainer among the Shanghai Composite's 896 members, on optimism the nation's economic recovery will boost demand for metals.
Aluminum Corp. of China Ltd., the country's largest maker of the metal, gained 10 per cent for a second day to 16.57 yuan. China Shenhua Energy Co., the nation's biggest coal producer, rose 5.4 per cent to 36.17 yuan.
Copper futures in Shanghai rose as much as 3.2 per cent, the highest since Oct. 14. Crude oil advanced for a fourth day, gaining as much as 1.3 per cent to $64.41 a barrel in New York.
China's demand for commodities drove up a measure of shipping costs for commodities. The Baltic Dry Index rose 1.2 per cent on July 17, according to the Baltic Exchange, capping a 19 per cent weekly advance.
China Cosco gained 7.4 per cent to 17.49 yuan. China Shipping Development Co., a unit of China's second-biggest sea- cargo group, jumped 9.2 per cent to 16.58 yuan.
China Life, the nation's biggest insurer, rallied 8.1 per cent to 32.40 yuan, the most since Oct. 13. The industry may report a combined profit of 26.1 billion yuan in the first half, the China Insurance Regulatory Commission said today. The regulator said insurance premium income rose 6.6 per cent to 598.6 billion yuan in the first six months from a year earlier.
Citic Securities Co. expects full-year profit to increase 14 per cent at the 1,606 companies listed on the Shanghai and Shenzhen stock exchanges, compared with an earlier 9 per cent estimate, analysts led by Yu Jun wrote in a report today.
Developers fell after the banking regulator ordered banks to boost reserves against non-performing loans while the regulator's Shanghai branch told lenders to obey rules on mortgages for second homes.
Poly Real Estate Group Co., the country's second-largest developer, declined 2 per cent to 28.62. The stock was the second-largest contributor to losses on the Shanghai Composite. Gemdale Corp., the No. 4, lost 1.8 per cent to 17.30 yuan.
Banks must boost their coverage ratio to 150 per cent of bad loans by the end of this year, up from 134 per cent at the end of June, Liu Mingkang, chairman of China Banking Regulatory Commission, said. Down payments on second homes must not be lowered for any reason, the commission's Shanghai branch said.
The central bank is concerned that excessive liquidity from bank lending is entering the stock and property markets, the Economic Observer newspaper said, citing He Keng, a deputy director of the Financial and Economic Affairs Committee of the National People's Congress.
Chinese stocks are the most expensive since February 2008, Bloomberg data shows. The Shanghai Composite is valued at 33.9 times earnings, up its November low of 12.9 times. New house prices in 36 cities rose 6.3 per cent in June from a year earlier, the National Development and Reform Commission said today.
The rally in stocks may have reached an "exhaustion point," DMG & Partners Securities Pte said, citing technical analysis. "The risks are clearly against those who are looking to buy into the market at present levels," DMG's Singapore- based analyst James Lim said in a report today.
The Shanghai Composite's 14-day relative strength index, measuring how rapidly prices have advanced during the specified time period, is at 79.9, according to Bloomberg data. The RSI has been above 70, a level that some investors view as a signal that the gauge is poised to fall, since July 14.
Jiangxi Copper Co. jumped by the daily 10 per cent limit and China Cosco Holdings Co., the world's largest operator of dry- bulk ships, soared 7.4 per cent as metal prices and freight rates rallied. China Life Insurance Co. climbed 8.1 per cent after regulators said insurers' profits may have doubled in six months.
The Shanghai Composite Index advanced 77.18, or 2.4 per cent, to 3,266.91 at the close, the most since June 1 and a 13-month high. The gauge has surged 79 per cent this year as banks tripled new loans to 7.37 trillion yuan ($1.1 trillion) in the first half from a year earlier and the government implemented a stimulus package. The CSI 300 Index, measuring Shanghai and Shenzhen exchanges, gained 2 per cent to 3,591.12.
"Investors still have high expectations about a fast economic recovery and corporate earnings improvement," said Zhang Ling, who helps oversee about $7.21 billion at ICBC Credit Suisse Asset Management Co. in Beijing. "Stocks are already expensive and the market is forming a bubble."
The benchmark index added 2.4 per cent last week, its fifth straight advance, as the country reported second-quarter economic growth of 7.9 per cent. The gains helped the stock market to briefly overtake Japan as the world's second largest by value. China's equity market may surpass the US in three years as state-owned companies sell new shares and the nation's 1.4 billion people put more money into stocks, Mark Mobius said.
"The Chinese population is just dipping its toe into equities and they've got a long way to go," Mobius, who oversees about $25 billion of emerging-market assets as executive chairman of Templeton Asset Management Ltd., said in an interview with Bloomberg Television in London on July 18.
Jiangxi Copper, the nation's biggest copper producer, surged 3.99 yuan to 43.90 yuan. The stock has rallied 340 per cent this year, making it the fifth biggest gainer among the Shanghai Composite's 896 members, on optimism the nation's economic recovery will boost demand for metals.
Aluminum Corp. of China Ltd., the country's largest maker of the metal, gained 10 per cent for a second day to 16.57 yuan. China Shenhua Energy Co., the nation's biggest coal producer, rose 5.4 per cent to 36.17 yuan.
Copper futures in Shanghai rose as much as 3.2 per cent, the highest since Oct. 14. Crude oil advanced for a fourth day, gaining as much as 1.3 per cent to $64.41 a barrel in New York.
China's demand for commodities drove up a measure of shipping costs for commodities. The Baltic Dry Index rose 1.2 per cent on July 17, according to the Baltic Exchange, capping a 19 per cent weekly advance.
China Cosco gained 7.4 per cent to 17.49 yuan. China Shipping Development Co., a unit of China's second-biggest sea- cargo group, jumped 9.2 per cent to 16.58 yuan.
China Life, the nation's biggest insurer, rallied 8.1 per cent to 32.40 yuan, the most since Oct. 13. The industry may report a combined profit of 26.1 billion yuan in the first half, the China Insurance Regulatory Commission said today. The regulator said insurance premium income rose 6.6 per cent to 598.6 billion yuan in the first six months from a year earlier.
Citic Securities Co. expects full-year profit to increase 14 per cent at the 1,606 companies listed on the Shanghai and Shenzhen stock exchanges, compared with an earlier 9 per cent estimate, analysts led by Yu Jun wrote in a report today.
Developers fell after the banking regulator ordered banks to boost reserves against non-performing loans while the regulator's Shanghai branch told lenders to obey rules on mortgages for second homes.
Poly Real Estate Group Co., the country's second-largest developer, declined 2 per cent to 28.62. The stock was the second-largest contributor to losses on the Shanghai Composite. Gemdale Corp., the No. 4, lost 1.8 per cent to 17.30 yuan.
Banks must boost their coverage ratio to 150 per cent of bad loans by the end of this year, up from 134 per cent at the end of June, Liu Mingkang, chairman of China Banking Regulatory Commission, said. Down payments on second homes must not be lowered for any reason, the commission's Shanghai branch said.
The central bank is concerned that excessive liquidity from bank lending is entering the stock and property markets, the Economic Observer newspaper said, citing He Keng, a deputy director of the Financial and Economic Affairs Committee of the National People's Congress.
Chinese stocks are the most expensive since February 2008, Bloomberg data shows. The Shanghai Composite is valued at 33.9 times earnings, up its November low of 12.9 times. New house prices in 36 cities rose 6.3 per cent in June from a year earlier, the National Development and Reform Commission said today.
The rally in stocks may have reached an "exhaustion point," DMG & Partners Securities Pte said, citing technical analysis. "The risks are clearly against those who are looking to buy into the market at present levels," DMG's Singapore- based analyst James Lim said in a report today.
The Shanghai Composite's 14-day relative strength index, measuring how rapidly prices have advanced during the specified time period, is at 79.9, according to Bloomberg data. The RSI has been above 70, a level that some investors view as a signal that the gauge is poised to fall, since July 14.