China Stock Watch 24/12/13

The recent “cash crunch” does not reflect well in China’s economic management. While the aim of restricting risky lending is laudable, the pursuit of this has been typically ham-fisted. As Aaron Back wrote in the WSJ:

The PBOC seems to have misjudged the potential for market strain, both in June and now. Communications have been erratic, with total silence from the central bank as concerns built last week. This was followed on Thursday by a post on the fashionable social media service Weibo announcing the injections, an abrupt change in messaging style from the secretive central bank.

Some day Chinese institutions will find that transparency, timely disclosure and good communications are helpful in managing expectations, handling markets, and reassuring investors: in other words, in maintaining share price. The companies take their lead from the top of course: if government is dreadful at communicating, it’s little wonder Chinese businesses follow suit. China Telecom‘s recent award for “Best Overall Investor Relations” show that there is an appetite for greater transparency, but this will likely only be replicated if it helps the bottom line. There’s a large cultural change needed, and government needs to help promote best practice.

On the day, major stocks had a modest day, with gains seen in telecoms and insurance, while banks (partly from “portfolio adjustment”) and construction fell. The biggest gains were posted by China Telecom (up 2.09% to RMB3.90) and Dongfeng Motor (up 1.61% to HK$12.66). Eight stocks saw a decline on the day, with Sinopec seeing the largest fall, drifting 1.3% to RMB 4.55. None of the other seven fell by over 1%.

The Shanghai Composite Index closed at 2,092.91, up 3.20 points (+0.15%).

I am making Xmas dinner tomorrow, and will be having a go at making beef wellington, instead of the usual turkey. If it comes out alright, I’ll post a picture.

Name Price Change Mkt cap 52wk high 52wk low EPS P/E
Sinopec 4.55 -0.06 (-1.30%) 530,372M 7.03 4.05 CN¥0.62 7.4
PetroChina 7.69 +0.01 (0.13%) 1.41B 9.5 7.08 CN¥0.68 11.38
ICBC 3.58 0.00 (0.00%) 1.26B 4.53 3.4 CN¥0.74 4.87
China Construction Bank 4.14 -0.03 (-0.72%) 1.04B 5.19 3.8 CN¥0.85 4.89
Agricultural Bank 2.46 -0.01 (-0.40%) 798,994M 3.28 2.38 CN¥0.50 4.9
Bank of China 2.65 -0.01 (-0.38%) 739,744M 3.26 2.48 CN¥0.53 4.99
China Mobile 80.95* +0.40 (0.50%) 1.63B 91.8 74.9 HK$8.17 9.91
Noble Group 1.04 +0.01 (0.97%) 6,892M 1.27 0.785 SGD0.04 28.73
China State Construction 3.18 0.00 (0.00%) 95,400M 4.18 2.9 CN¥0.62 5.16
CNOOC 14.36* +0.12 (0.84%) 641,137M 17.38 12.04 HK$1.89 7.61
China Railway Construction 4.67 -0.04 (-0.85%) 57,616M 6.49 3.95 CN¥0.84 5.55
China Railway Group 2.69 -0.01 (-0.37%) 57,297M 3.41 2.3 CN¥0.44 6.14
SAIC Motor 13.79 -0.01 (-0.07%) 152,043M 19 11.83 CN¥2.05 6.72
China Life Insurance 14.75 +0.05 (0.34%) 416,904M 22.7 12.88 CN¥0.97 15.26
Dongfeng Motor 12.66* +0.20 (1.61%) 109,080M 13.28 9.48 HK$1.37 9.22
China Shenhua 15.81 +0.06 (0.38%) 314,455M 25.7 15.51 CN¥2.25 7.02
Ping An Insurance 39.88 +0.36 (0.91%) 315,696M 53.27 31.69 CN¥3.45 11.56
China Telecom 3.90* +0.08 (2.09%) 315,636M 4.46 3.48 HK$0.26 15.14
China Communications Construction 4.05 +0.01 (0.25%) 65,508M 5.79 3.8 CN¥0.81 5
Bank of Communications 3.92 -0.02 (-0.51%) 291,110M 5.68 3.65 CN¥0.84 4.65
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