China Stock Watch 28/1/14

Stocks rebounded for the most part on news of China Credit Trust reaching an agreement to repay the capital for investors. This comes to around RMB3 billion, or US$500 million. The terse (surprise) statement in China Credit Trust’s website amounts to two lines and did not identify the new source of funds, but the Wall Street Journal suggests officials in (not necessarily from) Shanxi province, where the coal company which issued the bond is based, set up the deal.

This, of course leads to the issue of moral hazard. If a US$500m trust cannot go bust (in an economy of almost $US10bn), then lunatic schemes can go uncorrected by market rigour. On the other hand, the whole shadow banking industry does rather rest on the belief that the government will ultimately bail it out if necessary. If that were disproved, the whole thing could collapse. Chalk this up for a victory of expediency rather than financial discipline. It reminds me of the UK Conservative government of 1970-1974 pledging to stop supporting “lame duck” companies… and then doing precisely that. The parallel with Japan’s zombie banks also spring immediately to mind.

Today saw moderate gains for most major stocks. Fifteen appreciated on the day, with first prize going to Dongfeng Motor, up 2.1% to HK$11.66; Bank of Communications was next, putting on 1.3% to RMB3.8 a share. Only Sinopec, China Mobile, CNOOC, Shenhua Group, and China Telecom fell, with China Mobile showing the largest decline, at 0.73% (to HK$74.40).

The Shanghai Composite closed at 2038.51, up 5.21 (+0.26%).

Name Price Change Mkt cap 52wk high 52wk low EPS P/E
Sinopec 4.49 -0.03 (-0.66%) 523,378.23M 7.03 4.05 CN¥0.62 7.3
PetroChina 7.57 +0.05 (0.66%) 1.39B 9.5 7.08 CN¥0.68 11.2
ICBC 3.39 +0.03 (0.89%) 1.19B 4.53 3.33 CN¥0.74 4.61
China Construction Bank 3.92 +0.01 (0.26%) 980,043.05M 5.19 3.8 CN¥0.85 4.63
Agricultural Bank 2.38 +0.02 (0.85%) 773,010.04M 3.28 2.35 CN¥0.50 4.74
Bank of China 2.49 +0.01 (0.40%) 695,617.74M 3.26 2.45 CN¥0.53 4.69
China Mobile 74.40* -0.55 (-0.73%) 1.50B 89.2 74.2 HK$8.20 9.07
Noble Group 0.955 +0.005 (0.53%) 6,362.00M 1.27 0.785 SGD0.04 26.26
China State Construction 3.03 +0.03 (1.00%) 90,900.00M 4.18 2.9 CN¥0.62 4.92
CNOOC 12.16* -0.06 (-0.49%) 542,913.06M 16.52 12.04 HK$1.89 6.42
China Railway Construction 4.14 +0.01 (0.24%) 51,077.42M 6.25 3.95 CN¥0.84 4.92
China Railway Group 2.44 +0.03 (1.24%) 51,971.76M 3.36 2.3 CN¥0.44 5.57
SAIC Motor 13.1 +0.03 (0.23%) 144,434.93M 19 11.83 CN¥2.05 6.39
China Life Insurance 13.82 +0.06 (0.44%) 390,618.21M 22 12.88 CN¥0.97 14.3
Dongfeng Motor 11.66* +0.24 (2.10%) 100,463.96M 13.28 9.48 HK$1.38 8.46
China Shenhua 14.01 -0.08 (-0.57%) 278,653.59M 25.28 13.97 CN¥2.25 6.22
Ping An Insurance 39.15 +0.15 (0.38%) 309,916.97M 53.27 31.69 CN¥3.45 11.35
China Telecom 3.56* -0.02 (-0.56%) 288,119.23M 4.32 3.48 HK$0.26 13.77
China Communications Construction 3.83 +0.01 (0.26%) 61,949.24M 5.79 3.74 CN¥0.81 4.73
Bank of Communications 3.8 +0.05 (1.33%) 282,198.36M 5.68 3.65 CN¥0.84 4.51
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