China Stocks: Citic Heavy, ICBC, Kweichow Moutai, Poly, Vanke
The Shanghai Composite Index (SHCOMP), which tracks the bigger of China’s stock exchanges, advanced 1 percent to 2,223.58, the biggest gain in a week. The CSI 300 Index (SHSZ300) surged 1.7 percent to 2,472.61.
Banking stocks: Industrial & Commercial Bank of China Ltd. (601398 CH), the nation’s biggest listed lender, fell 1 percent to 3.91 yuan. China Construction Bank Corp. (939) (601939 CH), the second largest, lost 0.7 percent to 4.16 yuan.
The People’s Bank of China announced yesterday it will lower the one-year lending rate by 0.31 percentage point effective today, more than the 0.25 percentage point cut in the one-year deposit rate announced on the same day.
The rate cut will cut banks’ profits by 6 percent, Tracy Yu and Judy Zhang, analysts at Deutsche Bank AG, wrote in a note dated yesterday. Banks’ average profits may drop 10 percent next year at best and 54 percent at worst, May Yan, an analyst at Barclays Plc, wrote in a note.
Consumer stocks: Kweichow Moutai Co. (600519) (600519 CH), China’s biggest producer of baijiu liquor by market value, rose 3.3 percent to 259.99 yuan, a record close. Wuliangye Yibin Co. (000858 CH), the second largest, advanced 7.6 percent to 35.01 yuan, the biggest jump since November 2009.
Investors should get defensive and move out of stocks that are most tied to economic growth if the interest-rate cut triggers a technical rebound, Hao Hong, Hong Kong-based head of Chinese research at Bank of Communications Co., wrote in a note yesterday.
Developers: China Vanke Co. (000002) (000002 CH), the nation’s biggest listed property developer, advanced 3.8 percent to 9.65 yuan. Poly Real Estate Group Co. (600048 CH), the second largest, gained 5 percent to 12.82 yuan. China Merchants Property Development Co. (000024 CH), the third biggest, climbed 5 percent to 26.29 yuan.
The rate cut will benefit property stocks in the near term as investors and speculators re-enter the market, Du Jinsong, an analyst at Credit Suisse Group AG, wrote in e-mailed comments.
Citic Heavy Industries Co. (601608) (601608 CH), the heavy machinery unit of China’s largest conglomerate, gained 2.6 percent from its offer price to 4.79 yuan on the first day of trading in Shanghai today.
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