China stock market weekly wrap-up

Here goes a pretty good wrap-up of the past week in Chinese stocks...

China Economic Scan Weekly Economic Review – 24 April 2009

24/04/2009. Source: China Economic Scan. Callum Thomas, Managing Director, China Economic Scan

In the past week some high profile estimates of 2009 GDP growth surfaced, ranging from 7% to 8.3% for China. Meanwhile bank regulators said bad loans had fallen and held industry discussions on loan growth. Unemployment data came in only slightly weaker, and a report confirmed that corporate earnings had slipped in 2008.

The Chinese Academy of Social Sciences (CASS) announced forecasts for Chinese economic growth in 2009 of 8.3%. Wang Tongsan, Director at CASS, said "Basically, the target of GDP growth of 8% is achievable, although China's economy is still facing downward pressure,”

Elsewhere, Goldman Sachs economists Helen Qiao and Yu Song said China GDP growth might be 8.3% in 2009 (higher than an earlier estimate of 6%). “Policy makers in China have been pushing the envelope on policy easing in only one direction -- for more and more,” they said. “In the next three quarters, we expect domestic demand growth to further strengthen, bolstered by loose financial conditions and continued policy stimulus.”

Other Investment Bank forecasts for 2009 GDP growth included: Barclays Capital 7.2% (previously estimated 6.7%); UBS 7.5% (previously estimated 6.5%); Royal Bank of Scotland 7% (previously estimated 5%); CLSA Asia-Pacific Markets 7% (previously estimated 5.5%); and Merrill Lynch 8%.

In March China's bad loans fell to 2.04% of total credits. “I’m being responsible when I say that we will continue to see declines in both the outstanding bad loans and the ratio of non-performing loans,” said the China Banking Regulatory Commission Chairman, Liu Mingkang. Chinese banks had 549.5 billion yuan (about US$80 billion) in non-performing loans as of March; down by 10.7 billion yuan from the beginning of 2009.

The People's Bank of China met with officials from the top 5 commercial banks to discuss the next steps in the country's credit management policy; "The central bank will not control the scale of credit extended by commercial banks, but we do hope that banks can lend loans more steadily and rationally in the coming three quarters," said Yi Gang, vice governor of the central bank. New loans in the first quarter totaled 4.58 trillion yuan ($671 billion).

The State-owned Assets Supervision and Administration Commission (SASAC), is working with the Finance Ministry of China to launch an agency to restructure and consolidate SOEs. The Central Huijin-like fund is expected to have at least 50 billion yuan ($7.3 billion) of capital and to be directly led by SASAC, and will likely team up with Chinese private equity funds for investments it makes e.g. CITIC, CIC etc.

China's unemployment rate rose to 4.3% in Q1 2009 (versus the 2008 year-end figure of 4.2%) according to Yin Chengji of the Ministry of Human Resources and Social Security. 2.68 million new jobs were created in cities across China in the first quarter of 2009, about 30% of the government’s 2009 target of 9 million.

China’s corporate profits fell 73% to 43.4 billion yuan ($6.4 billion) in Q4, and 2008 full year profits fell 14% to 706.09 billion according to a report by Haitong Securities. The report was based on 1,255 A-share companies, accounting for 80% of the 1,602 businesses whose shares trade in Shanghai and Shenzhen. Haitong’s report also warned of a “higher possibility” of further declines in the first half of 2009.

China Economic Scan is a leading provider of daily updates on the Chinese economy and financial markets. China Economic Scan focuses on bringing you the facts from the hundreds of articles that compete for your attention each day. You save time and due to our willingness to probe further and add value with additional facts and research; you get an edge in staying on top of the key developments in the world’s 3rd largest economy. For more info visit China Economic Scan

China Economic Scan Weekly Economic Review 24 April 2009
 
Here's the stocks review...

Oops, that was the econ one; here's the stocks one...

China Economic Scan Weekly Stockmarket Review – 25 April 2009

25/04/2009. Source: China Economic Scan. Callum Thomas, Managing Director, China Economic Scan

Chinese stocks closed down week on week with the Hang Seng falling –2.19% to 15,258.85, the Shanghai Composite down –2.21% to 2,448.60 and the Shenzhen Component off -2.76% to 9,315.21. But there were bright spots with the world’s largest IPO set to go ahead within the next 2 months, and the new “GEM” stock exchange taking further steps toward implementation.

China Zhongwang Holdings announced it will seek to raise up to HKD12.32 billion (US$1.6 billion) in the world's largest IPO this year. Citic Securities, JPMorgan Chase and UBS are managing the sale. The company will offer 1.4 billion new shares in Hong Kong at a price between HK$6.80-8.80 each. Pricing of its shares is scheduled for April 30 and listing is targeted for May 8.

China Zhongwang, maker of aluminium extrusion products such as window frames and railcar components, is touted as a Chinese economic recovery play and is likely to gain from stimulatory spending. It earned 1.9 billion yuan (US$278m) in 2008 on revenue of 11.3 billion yuan (versus 852 million on 7.5 billion in 2007).

Also revealed during the week; Huiyuan and Coke are rumored to be in talks about Coke establishing a minority stake in the company. Previously Coke had tried to takeover Huiyuan but failed to gain regulatory approval on competition concerns.

Also during the week, the China Securities Regulatory Commission (CSRC) said it would establish a 35 member independent committee, with industry representation, to approve listings on the new Growth Enterprise Market (GEM), which is set to commence operations from the 1st of May this year. The CSRC said, "The GEM has differences from main boards such as company qualifications, information disclosure and supervision. An independent committee is thus necessary,”

A Haitong report said China’s corporate profits fell 73% to 43.4 billion yuan ($6.4 billion) in Q4, with full year profits in 2008 falling 14% to 706.09 billion. Haitong cautioned of a “higher possibility” of further earnings declines in the first half of 2009.

Among those to announce their profits this week, China Mobile said net income in Q1 increased 5.2% to 25.2 billion yuan (US$3.7 billion) from 23.9 billion yuan in Q1 2008. Its operating revenue increased 9.2% to 101.3 billion yuan and EBITDA was up 7.7% to 53.38 billion yuan with an EBITDA margin of 52.7%. Earnings were less than median estimates of 26.5 billion yuan.

Shenzhen Development Bank (SDB), controlled by U.S. private equity firm TPG Capital, posted a 12% rise in Q1 net profit to 1.12 billion yuan ($161 million) from 1 billion a year earlier. Revenue rose 6% to 3.76 billion yuan from 3.55 billion yuan. The result was a turnaround from SDB's 77% slump in annual profit last year after a 5.6 billion yuan bad-loan write-off during the fourth quarter of 2008.

Shares in Yili Industrial jumped almost 8.6%, and shares in Bright Dairy & Food jumped 10% on Thursday, as the government offered a hand out of 3 billion yuan ($439 million) to help improve hog and dairy farming facilities, as well as offering to grant loans to dairy farmers.

Henan Yuguang Gold & Lead said its Q1 2009 profit dropped 75% to 12.9 million yuan; and phone equipment company, ZTE Corp, also released its Q1 profit, but saw an increase of 29% from a year earlier to 78.7 million yuan.
China Economic Scan is a leading provider of daily updates on the Chinese economy and financial markets. China Economic Scan focuses on bringing you the facts from the hundreds of articles that compete for your attention each day. You save time and due to our willingness to probe further and add value with additional facts and research; you get an edge in staying on top of the key developments in the world’s 3rd largest economy. For more info visit China Economic Scan

China Economic Scan Weekly Stockmarket Review – 25 April 2009
 
China Economic Scan Weekly Economic Review – 1 May 2009

1/05/2009. Source: China Economic Scan. Callum Thomas, Managing Director, China Economic Scan

In the past week SASAC revealed SOE profits dropped 42%, and the government announced it would spend an additional 70 billion yuan of its 4 trillion yuan stimulus package. Internationally, China and Taiwan finished talks productively and positively, and China signed a free trade deal with Peru after a year of negotiations.

The Chinese government announced it is preparing to spend an additional 70 billion yuan ($10.3 billion), mostly on infrastructure projects. The spending will be the 3rd installment of the 4 trillion yuan ($586 billion) package, which was announced in November. The central government has so far spent 230 billion yuan ($33.8 billion) of the package: 100 billion yuan ($14.6 billion) in Q4 08 and 130 billion yuan ($19 billion) in Q1 09.

The 138 SOEs directly controlled by the central government, reported profits of 119.49 billion yuan in the first quarter, down 41.8% year on year, on sales revenue of 2.36 trillion yuan, down 9.1% year on year, according to the State-owned Assets Supervision and Administration Commission (SASAC).

The profit for March was 62.29 billion yuan, up 85.7% from February, on sales of 935.54 billion yuan, up 26.8% versus Feb. In 2008, SOEs recorded the first annual decline since 2002, falling more than 30% year on year to 665.29 billion yuan.

Internationally, talks last Sunday between the Association for Relations Across the Taiwan Straits (ARATS) and the Straits Exchange Foundation (SEF) resulted in an initiative that will see Chinese mainland companies being allowed to invest
in Taiwan for the first time in 60 years. Another initiative involves setting up a regulatory framework for financial services firms to operate in both markets. Including gradually setting up a clearing system for the Taiwan dollar and the yuan.

"This will drive new investment in the domestic market and bring strong interest from foreigners as well," Standard Chartered economist Tony Phoo was quoted as saying. A few days following this development, China Mobile said it would buy a 12% stake in Taiwan's Far EasTone for $529 million; one of the biggest investments by a Chinese firm in Taiwan.

Chinese Vice President Xi Jinping and his Peruvian counterpart Luis Giampietri Rojas witnessed the signing of a free trade agreement (FTA) between China and Peru, after a year in the making. "The pact covers a wide range of fields and features a high-degree of openness," said Zhu Hong, deputy director general of the International Department of China's Ministry of Commerce. The FTA includes opening service sectors and offering favourable treatment of each other’s investors. Trade between the 2 countries reached $7.5 billion in 2008.

Macao's trade deficit for the first quarter of 2009 dropped by 3.2% year-on-year to 6.18 billion patacas (US$782 million). The figures showed that Macao's total exports of goods fell by 49.2% year-on-year to 2.03 billion patacas (US$257 million dollars), with the value of domestic exports and re-exports declining by 63.5% and 24% respectively, while total imports of goods slid by 20.9% to 8.21 billion patacas (1.04 billion dollars) during the first quarter.

The value of Textile and garment exports by Macao declined by 64% year-on-year to account for 42.1% of the total exports of goods and the value of Non-textile exports also dropped by 27.6%.

On the environmental front China allocated 23 billion yuan (3.37billion U.S. dollars) for energy saving, anti-pollution, ecological and environmental protection projects since Q4 2008. Han Yongwen, secretary-general of the NDRC, said investment in these sectors totaled 10% of the 230 billion yuan government spending to date.

Of the 23 billion yuan spending, 13 billion went to improving urban water treatment facilities, 4 billion yuan to pollution prevention projects on the Huaihe and other big rivers, 3.5 billion yuan to forest planting projects and the other 2.5 billion yuan to key energy saving projects across the country.

China Economic Scan is a leading provider of daily updates on the Chinese economy and financial markets. China Economic Scan focuses on bringing you the facts from the hundreds of articles that compete for your attention each day. You save time and due to our willingness to probe further and add value with additional facts and research; you get an edge in staying on top of the key developments in the world’s 3rd largest economy. For more info visit China Economic Scan

China Economic Scan Weekly Economic Review 1 May 2009
 
China Economic Scan Weekly Stockmarket Review – 8 May 2009

8/05/2009. Source: China Economic Scan. Callum Thomas, Managing Director, China Economic Scan

Chinese stocks had a phenomenal week with the Hang Seng leading the charge, up 12.04% since the end of last week, at 17,389.87. Taiwan closely followed, powered by speculation of cross-strait M&A, the TAIEX index rose 9.87% to 6,583.87. Mainland stocks also climbed, with the Shanghai Composite up 5.98% week on week to 2,625.65, and the Shenzhen Component up 7.16% to 10,183.06.

The combined net profit of the 1,624 listed companies in the Chinese mainland dropped 25.81% year on year in the first quarter (but was up 450.39% from the previous quarter) to 203.8 billion yuan. 1,186 companies reported gains, making up 73.03% of the total. The number of companies reporting losses increased nearly 200% to 438 compared with the same period last year.

China Galaxy Securities said China is at risk of a stock market “bubble” that may burst as investor confidence in the nation’s economic recovery weakens and bank lending slows. The Shanghai Composite Index has charged up 50% since last year’s low on Nov. 4, driving valuations on the index to 27.2 times earnings.

Statistics from China Securities Depository and Clearing Corp indicated that at the end of last year, institutional investors held 54.62% of the market value of all tradable A shares, versus 48.71% a year earlier. Stock values held by individual investors accounted for an overwhelming 69.87% at the end of 2005.

On the topic of capital raising, the first listing on China's new Growth Enterprise Board (GEB) is expected in August, with 18 tech-related companies based in Zhongguancun set to list.

Li & Fung Ltd plans to raise about $350 million, selling stock at a range between HK$22.55 and H$23.38 per share to institutional investors. Citigroup and Goldman Sachs are managing the sale. Li & Fung is raising capital to finance potential acquisitions and strengthen its balance sheet.

On results, Sohu.com said Q1 earnings jumped 106% to $44.6 million (beating analyst estimates of $40.3 million), or $1.15 a share, from $21.6 million, or 55 cents, a year earlier. Changyou, 68.5% owned by Sohu, said Q1 profit more than doubled to $33.5 million. Revenue, driven primarily by sales from the Tian Long Ba Bu role-playing game, increased 50% to $61.6 million.

Alibaba's Q1 profit fell 16% to 253.4 million yuan (about US$37 million, and above analyst estimates of 201 million yuan) after sales and marketing costs rose 43%. Alibaba is considering international acquisitions as it aims to derive one third of its revenue from overseas customers in 3-5 years, from about 2% at present.
Guangzhou R&F Properties said its contracted sales in April jumped 80% from a year earlier to 2.34 billion yuan ($343 million) and it was confident of achieving its interim sales target.

China Economic Scan is a leading provider of daily updates on the Chinese economy and financial markets. China Economic Scan focuses on bringing you the facts from the hundreds of articles that compete for your attention each day. You save time and due to our willingness to probe further and add value with additional facts and research; you get an edge in staying on top of the key developments in the world’s 3rd largest economy. For more info visit China Economic Scan

China Economic Scan Weekly Stockmarket Review – 8 May 2009
 
China Economic Scan Weekly Stockmarket Review – 16 May 2009

16/05/2009. Source: China Economic Scan. Callum Thomas, Managing Director, China Economic Scan
Chinese stocks finished the week mixed versus last Friday’s close. Mainland stocks rose slightly with the Shanghai Composite up 0.75% at 2,645.26 and the Shenzhen Component up 0.89% at 10,273.23, while the Hang Seng closed down –3.45% week on week to 16,790.70, and the TAIEX down -1.44% to 6,489.09.

During the week there were a range of interesting developments, Hong Kong Exchanges & Clearing said net income dropped 49% to HK$834.2 million ($108 million) in the 3 months ended March 31, after the global recession caused trading to decline. The average daily value of securities traded on the exchange slumped 55% to HK$44.7 billion from a year earlier.

Keeping with the Hong Kong exchange, China Resources Power Holdings, a Chinese electricity producer, was named to replace Yue Yuen Industrial Holdings in the Hang Seng Index. Hang Seng Indexes Co also said in its quarterly review that HSBC would be capped at a weighting of 15% from the current 20%. The changes to the 42 constituent index will be enacted from 8 June 2009.

In resources, China National Offshore Oil Corp (CNOOC) signed an agreement with UK-based BG Group involving a liquefied natural gas (LNG) development project in Queensland, Australia. Under the agreement, CNOOC would buy 3.6 million tons per annum (mtpa) of LNG for 20 years. The project would come on line in 2014 with two liquefaction trains providing 7.4 mtpa capacity.

China CITIC Bank said it would buy a 70.32% stake in investment holding company CITIC International Financial Holdings for HK$13.6 billion (US$1.75 billion). The acquisition will let CITIC Bank expand its branch network to other international finance centers and establish a stronger presence in Hong Kong. CITIC Bank said the unaudited net asset value of CITIC International Financial Holdings was about HK$9.5 billion at the end of 2008.

Also CITIC-Prudential Life Insurance, a joint venture (JV) equally owned by China's state-owed CITIC Group and Prudential Plc of Britain, said it intends to launch an A-share listing in 2012. CITIC-Prudential has been posting losses since its establishment in October 2000. As of the end of 2008, it registered a net loss of about RMB 200 million.

On the international front, China and Britain agreed on Monday to prioritize opening China's stock markets to foreign companies and to arrange for more Chinese firms to list on London exchanges, in negotiations said to be largely driven by HSBC. As yet no timetable has been set, however there was talk of aiming to get Chinese companies listed in London as early as in the next few months.

Jien Nickel, one of China's leading nickel producers, said in a filing to the Shanghai Stock Exchange that it is now the largest shareholder of Australia's Metallica Minerals, after buying 19.95% of the company with A$5.16 million ($3.93 million). The company bought 22.85 million shares of the Metallica Minerals at a price of A$0.2259 per share.

Anshan Iron and Steel Group (Ansteel) received approval to increase its stake in Australian iron miner Gindalbie Metals up to a new cap of 36.28%. Ansteel is also a 50% JV partner with Gindalbie to develop the A$1.8 billion Karara Iron Ore Project.

China Economic Scan is a leading provider of daily updates on the Chinese economy and financial markets. China Economic Scan focuses on bringing you the facts from the hundreds of articles that compete for your attention each day. You save time and due to our willingness to probe further and add value with additional facts and research; you get an edge in staying on top of the key developments in the world’s 3rd largest economy. For more info visit China Economic Scan

China Economic Scan Weekly Stockmarket Review – 16 May 2009
 
China Economic Scan Weekly Stockmarket Review – 23 May 2009

China Economic Scan Weekly Stockmarket Review – 23 May 2009

23/05/2009. Source: China Economic Scan. Callum Thomas, Managing Director, China Economic Scan

Mainland stocks closed the week down with the Shenzhen Component down -1.95% week on week to 10,073, and Shanghai Composite down -1.78% to 2,598. Hong Kong stocks however closed up +1.62% with the Hang Seng at 17,063 and in Taiwan the TAIEX jumped +3.82% to 6,737.

During the week Citic Securities Chairman Wang Dongming said China has 300 to 400 companies waiting to do initial public offerings (IPO). China’s securities regulator plans to set up a new system for pricing IPOs and may “soon” end a moratorium on IPOs. Wang also said “The decision on who to list, how to price the listing should be given to the investment bank, company and investors,”

American Dairy reported Q1 sales of $113.8 million vs $39.1 million last year, on increased sales of infant formula. Milk powder sales rose more than threefold in the quarter. “Our first quarter 2009 sales reflect consumers’ flight to quality at the height of the melamine crisis in China,” said Leng You-Bin, chief executive officer of American Dairy.

Esprit, which makes 85% of sales in Europe, said that sales in the 9 months through March fell 2% to HK$27.2 billion ($3.5 billion) as the local currency
gained against the euro. Esprit’s wholesale revenue, including earnings from department-store counters, fell 8% to HK$14.8 billion, even as retail sales rose 5.9% to HK$12.2 billion.

PetroChina said it will buy 8 gas suppliers from its parent company and issue 26 billion yuan in medium-term notes. Goldman Sachs Group raised its stock rating to “neutral.”

A Chinese Fund manager, Zhang Ling, at ICBC Credit Suisse Asset Management which oversees the equivalent of $7.21 billion, said “Stocks are expensive now and have reached a level investors deem too high to be pushed up further,” and that “Corporate earnings have yet to catch up.”

Finally, in an exciting development, the China Financial Futures Exchange (CFFEX) is said to be likely to receive approval to launch trading in a Shanghai Shenzhen 300 Index future soon, having conducted mock trading for a little under 3 years.

Trading in the Chinese stock index futures will be limited to investors who have a balance in their margin account of at least 500,000 yuan ($73,313.78); pass a CFFEX test; and have practical experience in the mock trading of stock index futures.

China Economic Scan is a leading provider of daily updates on the Chinese economy and financial markets. China Economic Scan focuses on bringing you the facts from the hundreds of articles that compete for your attention each day. You save time and due to our willingness to probe further and add value with additional facts and research; you get an edge in staying on top of the key developments in the world’s 3rd largest economy. For more info visit China Economic Scan

China Economic Scan Weekly Stockmarket Review – 23 May 2009
 
China Economic Scan Weekly Stockmarket Review - 31 May 2009

31/05/2009. Source: China Economic Scan. Callum Thomas, Managing Director, China Economic Scan

Chinese stocks closed the week up; the Hang Seng lead by a whopping 6.5% at 18,171, the TAIEX followed with 2.27%, Shanghai closed up 1.36% to 2633 and Shenzhen was up 0.55% to 10,128.

The gains put the Shanghai index up 45% so far this year, with gains for each of the first 5 months of this year. "Ample liquidity and optimism about economic recovery have contributed to the monthly rally," said Wang Peng, Shanghai-based chief investment officer at First Trust Fund Management Co. "The gains may not last if we fail to see more good economic and corporate data."

In a very interesting development, the China Securities Regulatory Commission (CSRC) said it would end a de facto suspension of initial public offerings (IPOs) on the Shanghai and Shenzhen stock exchanges as of June 5. The CSRC effectively suspended all new stock issues last September, as it halted approvals. New guidelines issued by the CSRC aim to improve the price discovery function of the stock market, and help retail investors subscribe to newly issued stocks.

Enjoyor Technology Group is preparing for listing on the to-be-established Growth Enterprise Board (GEB) of the Shenzhen Stock Exchange (SSE), said an executive of the Chinese intelligentization solution provider. Intel Capital, the investment arm of Intel Corporation invested in the company earlier this year. The company was built in Hangzhou Hi-tech Industry Development Zone, and is engaged in building of intelligent traffic, medical, educational, security, financial and office systems.

Tingyi (Cayman Islands) Holding Corp., China’s biggest maker of packaged food, said profit climbed 43% to a quarterly record on higher instant-noodle and beverage consumption in the world’s third-largest economy. Q1 net income rose to $93 million, from $65 million a year earlier. Sales increased 21% to $1.18 billion. Instant noodle sales gained 12% to $587.7 million in and beverage sales rose 37% to $525 million, Tingyi said.

Xinao Gas Holdings, a distributor of piped natural gas in Mainland China, Executive Director Wilson Cheng said sales would rise by at least 25% each year until 2014. Xinao aims to sell 2.8 billion cubic meters of gas this year, compared with 2.2 billion in 2008. Xinao, based in Hebei province in northern China, forecasts it will connect 750,000 more households to the gas network this year, up to a total of 4.5 million.

Bain Capital may buy as much as 20% of Gome Electrical Appliances Holdings, China’s second-largest electronics retailer, for about $500 million. Bain is apparently competing for Beijing-based Gome with KKR & Co. and Warburg Pincus. Gome’s more than 800 stores in at least 160 Chinese cities make it an attractive target for investors faced with stagnant economies in the U.S., Europe and Japan.

China Economic Scan is a leading provider of daily updates on the Chinese economy and financial markets. China Economic Scan focuses on bringing you the facts from the hundreds of articles that compete for your attention each day. You save time and due to our willingness to probe further and add value with additional facts and research; you get an edge in staying on top of the key developments in the world’s 3rd largest economy. For more info visit China Economic Scan

China Economic Scan Weekly Stockmarket Review – 23 May 2009
 
 
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