Ping An Bank Co. (000001), the first lender to report earnings next week, led a rally for financial stocks on speculation a slump that sent valuations to the biggest discount in a month compared with a broader index was excessive.
Ping An jumped 9.2 percent at the 11:30 a.m. break in Shenzhen, poised for the biggest gain since Jan. 28. China Minsheng Banking Corp. (600016) advanced 4.6 percent, the most since Feb. 1. The CSI 300 financial index of banks, brokerages, developers and insurers increased 2.2 percent, the most among 10 industrial groups on the CSI 300 Index. The CSI 300 rose 0.8 percent.
The financial gauge had dropped 6.6 percent this month amid concern the government will curb mortgage lending to prevent housing prices from rising further. That compared with a 3.1 percent slide for the CSI 300. The financial sub-index traded at 8.1 times 12-month projected profit yesterday, 22 percent lower than the CSI 300, according to data compiled by Bloomberg. That’s the biggest discount since Jan. 21.
“As the economy improves, there are expectations of better earnings,” Yayun Tang, an analyst at Northeast Securities Co., said by phone today from Shanghai. “Concern about property tightening affecting loans has also been priced in.”
Ping An Bank and China Minsheng Bank have stopped mortgage lending in Beijing, Beijing Morning Post reported today, citing unidentified people from banks. Ping An Bank and China Minsheng bank spokesmen said they couldn’t immediately comment on the report when contacted by Bloomberg by phone.
Ping An Bank is scheduled to release earnings on March 7, according to data compiled by Bloomberg. The lender will probably report full-year net income of 13.87 billion yuan ($2.2 billion), according to 11 analyst estimates compiled by Bloomberg. The bank reported profit of 10.28 billion yuan in 2011, when it was named Shenzhen Development Bank Co.
Shanghai Pudong Development Bank estimated a 25 percent jump in 2012 profit on Jan. 4, prompting Ping An Securities Co. to issue a report saying more banks will post results that beat market expectations. Banking valuations will be “repaired” as fundamentals improve, Ping An Securities analysts wrote.
China’s economic growth accelerated for the first time in two years in the fourth quarter. The median estimate of economists surveyed from Feb. 15 to Feb. 20 by Bloomberg News was for GDP growth of 8.1 percent in 2013. Expansion was 7.8 percent in 2012, statistics bureau data showed in January.
China Construction Bank Corp., the nation’s biggest mortgage lender, gained 1.1 percent today. Its mortgage loans accounted for 20 percent of the total loan portfolio at the end of June, according to earnings reports.
Some ministries and local governments may announce detailed rules to control the property market soon, the China Securities Journal reported yesterday, citing an unidentified person. Some of the measures will likely be announced before the National People’s Congress and the Chinese People’s Political Consultative Conference in March, according to the report.
Premier Wen Jiabao called for home-purchase restrictions in cities with “excessively fast” price gains last week, as a Feb. 22 government report showed new home prices climbed in January in 53 of the 70 cities that are tracked, compared with the previous month’s 54, which was the most since April 2011.
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