Feb. 19 (Bloomberg) -- Chinese bank stocks rallied, led by Bank of Beijing Co., after Shanghai Securities News said the lender formed a mobile tie-up with smartphone maker Xiaomi Corp.
Bank of Beijing surged by its 10 percent daily limit to 7.95 yuan at the close of Shanghai trading after the Securities News reported the lender and Xiaomi signed an agreement to cooperate on mobile payment, customization of products and channel expansion. China Citic Bank Corp. also jumped 10 percent to 5.16 yuan, the highest level since March 2013.
“Internet finance and mobile payment are hot topics in the market now and companies entering the area will be the focus of thematic investment,” Dai Ming, a Shanghai-based fund manager at Hengsheng Hongding Asset Management Co., said by phone today. “Through these new channels, banks can expand their customer bases and serve more medium and small clients.”
Beijing-based Citic Bank rallied 42 percent since Feb. 7 as investors bet on a closer partnership with Alibaba Group Holding Ltd., whose Yu’E Bao product had attracted over 400 billion yuan of investment as of Feb. 14. Citic Bank said Feb. 13 that it had no equity cooperation with Alibaba. The lender reported Feb. 17 preliminary 2013 profit that beat analyst estimates.
Concerns about the quality of assets at Chinese banks and tighter liquidity amid a government crackdown on shadow banking has dragged lenders’ shares to near record-low valuations. Mainland banks are trading at an average 5 times their forecast 2013 earnings in Shanghai and Shenzhen, compared with 8.4 times for the benchmark Shanghai Composite Index, according to data compiled by Bloomberg.
“Investors expect 2013 earnings to be better than their initial expectations. They had imagined it to be really bad at first,” said Becky Xu, a Shanghai-based analyst at SWS Research Co. “There are also themes like company cooperation.”
Bank of Beijing officials weren’t immediately available for comment. A Citic Bank press officer, who declined to be named citing company policy, said there was no update to the lender’s Feb. 13 statement.
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