Hong Kong Shares At Highest Since March 15, China Inches up

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Hong Kong shares reached their highest close in eight sessions, as two of the "Big Four" Chinese banks reported relatively solid 2012 results and other company earnings on Wednesday spurred significant price-moves.

* HSI +0.7 pct, H-shares +1 pct, CSI300 +0.3 pct

* China banks in HK lifted by AgBank, BoC 2012 earnings

* Sinopec lifted by new China fuel pricing system

Hong Kong shares reached their highest close in eight sessions, as two of the "Big Four" Chinese banks reported relatively solid 2012 results and other company earnings on Wednesday spurred significant price-moves.

But mainland investors weren't thrilled with the results from giants Agricultural Bank of China (AgBank) and Bank of China, sending their A-share listings down 0.3 and 1.4 percent, respectively.

The CSI300 of the leading Shanghai and Shenzhen A-share listings ended a choppy day up 0.3 percent, while the Shanghai Composite Index gained 0.2 percent as volume lingered below its average over the past month.

The Hang Seng Index rose 0.7 percent at 22,464.8, a third straight daily gain taking it to the highest close since March 15. The China Enterprises Index of the top Chinese listings in Hong Kong climbed 1 percent.

Gains came in turnover some 13 percent less than its 20-day moving average. Turnover in the territory has lingered below that milestone for six of the last seven days.

"Earnings from the Chinese banks were largely in line, as with most of companies that have reported, but longer term issues to do with bad loans and interest rate liberalisation remain," said Wang Ao-chao, UOB-Kay Hian's Shanghai-based head of research.

"There might be another bounce for the sector's shares if March inflation dips, but I would remain cautious," Wang added, suggesting investors remain defensive.

Bank of China climbed 2 percent in Hong Kong, adding to its outperformance over Big Four rivals on the year. It is now up 4.3 percent in 2013. AgBank rose 0.5 percent on Wednesday, leaving it still down 1 percent this year.

Although both banks did not report a decline of overall net interest margins and posted non-performing loan ratios well within expectations, onshore Chinese investors focused on the increase in their bad loans for the area around the Yangtze River Delta.

In Hong Kong, shares of Industrial and Commercial Bank of China (ICBC), the country's largest, rose 0.7 percent and Bank of Communications, the country's fifth-largest, gained 1.2 percent ahead of their 2012 results.

After markets closed, ICBC, the world's biggest bank by market value, said 2012 earnings rose 14.5 percent, beating analyst estimates, helped by widening margins as it lent more to small- and medium-sized enterprises.

Now down 1 percent in 2013, ICBC is trading at 1.2 times its forward 12-month price to book value, according to Thomson Reuters StarMine. That is a 42 percent discount to its historic median, similar to the price-to-book valuation for China Construction Bank and Bank of China.

Of the 66 percent of Hong Kong-listed companies that have posted 2012 earnings, more than half have underwhelmed expectations, according to Thomson Reuters StarMine, with the energy and materials sector reporting the most disappointing results.

On Wednesday, Chinese oil majors were buoyed by an announcement that China will start a more flexible system for pricing domestic fuel, the first major revamp for four years, to help avoid shortages and tame consumption.

The new system should reverse years of losses for China's oil refiners, analysts said, by increasing the link with world crude prices and scrapping a rigid formula for altering prices for oil products such as gasoline and diesel.

Shares of the biggest state-owned refiner, China Petroleum and Chemical Corp (Sinopec), climbed 2 percent. Alliance Bernstein said Sinopec should benefit most from the reform and should see the operating margin for its refining improve to 10-12 yuan ($1.6-$1.9) per barrel from 7 yuan in 2012.

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