China Stock Watch 7/1/14

There’s been more than a few articles about how 2014 will be a good year for stock markets, but there’s been little sign of it so far with Chinese stocks. Major Chinese stocks are in several cases hovering around 10% above their 52-week low, and the Shanghai Composite is also circling that psychologically important 2000 barrier. That reform stuff that the Hu/Wen leadership kept putting off and putting off? They weren’t procrastinating. They knew it was backbreaking, painful stuff. Now Xi/Li have some enormously difficult work to do, in reining in debt, making at least a start on cleaning up the environment, breaking up or reforming the bloated SOEs, improving productivity, improving IP laws to enhance innovation, deflating the real estate bubble without bursting it, reforming pensions, the hukou and healthcare, improving education… and it goes on. It’s a monumental to-do list. Chinese stocks, consequently, face considerable uncertainty, as the macroeconomic environment tightens and reforms look set to burst SOE privileges.

On the day, then, fifteen of the major stocks fell, with China Construction Bank the worst performer, falling 1.96% to RMB4 a share (against a year low of RMB3.8). The P/E ratios of the four major banks (ICBC, Construction Bank, Agricultural Bank and Bank of China) are all around 4.8, which is remarkably low – until one reflects the likelihood of unrevealed bad debts and the problems revealed by the two recent credit crunches.

The only gains were posted by SAIC Motor (+0.84%), China Communications Construction (+0.78%) and Bank of Communications (+0.27%).

The Shanghai Composite Index closed marginally up, by 1.61 points (+0.08%), at 2,047.32.

Name Price Change Mkt cap 52wk high 52wk low EPS P/E
Sinopec 4.41 -0.07 (-1.56%) 514,053.02M 7.03 4.05 CN¥0.62 7.17
PetroChina 7.73 -0.04 (-0.51%) 1.41B 9.5 7.08 CN¥0.68 11.44
ICBC 3.55 0.00 (0.00%) 1.25B 4.53 3.4 CN¥0.74 4.83
China Construction Bank 4 -0.08 (-1.96%) 1.00B 5.19 3.8 CN¥0.85 4.73
Agricultural Bank 2.43 -0.01 (-0.41%) 789,249.73M 3.28 2.38 CN¥0.50 4.84
Bank of China 2.51 -0.02 (-0.79%) 701,205.02M 3.26 2.48 CN¥0.53 4.73
China Mobile 78.10* -0.05 (-0.06%) 1.57B 91.8 74.9 HK$8.20 9.52
Noble Group 1.03 0.00 (-0.48%) 6,825.89M 1.27 0.785 SGD0.04 28.42
China State Construction 3.03 0.00 (0.00%) 90,900.00M 4.18 2.9 CN¥0.62 4.92
CNOOC 13.66* -0.18 (-1.30%) 609,884.24M 17.38 12.04 HK$1.89 7.21
China Railway Construction 4.26 -0.05 (-1.16%) 52,557.93M 6.49 3.95 CN¥0.84 5.06
China Railway Group 2.49 -0.02 (-0.80%) 53,036.75M 3.41 2.3 CN¥0.44 5.68
SAIC Motor 13.15 +0.11 (0.84%) 144,986.20M 19 11.83 CN¥2.05 6.41
China Life Insurance 14.75 -0.03 (-0.20%) 416,904.40M 22.04 12.88 CN¥0.97 15.26
Dongfeng Motor 11.62* -0.16 (-1.36%) 100,119.31M 13.28 9.48 HK$1.38 8.44
China Shenhua 14.82 -0.02 (-0.13%) 294,764.17M 25.47 14.72 CN¥2.25 6.58
Ping An Insurance 40.1 -0.19 (-0.47%) 317,437.29M 53.27 31.69 CN¥3.45 11.63
China Telecom 3.70* -0.04 (-1.07%) 299,449.77M 4.42 3.48 HK$0.26 14.31
China Communications Construction 3.89 +0.03 (0.78%) 62,919.72M 5.79 3.8 CN¥0.81 4.81
Bank of Communications 3.76 +0.01 (0.27%) 279,227.85M 5.68 3.65 CN¥0.84 4.46
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