Bloomberg News

Chinese Stock Indexes Advance After Retail Sales; Banks Gain

December 14, 2005

China's Shanghai Composite Index rose for a fourth day, led by lenders such as Shanghai Pudong Development Bank (600000) Co., on speculation that the industry will be more profitable than others, such as making steel or automobiles.

``The general consensus is that banks are less affected by possible economic slowdowns,'' said Meng Qingliang, Shanghai-based trader at Haitong Securities Co. ``At a time when steel, cement, cars, and other products are in oversupply after investment slowed, funds find shelter in banking stocks.''

The Shanghai Composite Index, which covers yuan-denominated A shares and foreign-currency B shares, rose 7.54, or 0.7 percent, to 1125.39 at 3 p.m. local time close. The Shenzhen Composite Index, which tracks the smaller market, gained 2.92, or 1.1 percent, to 271.55.

Shanghai Pudong, the Chinese partner of Citigroup Inc., added 0.21 yuan, or 2.3 percent, to 9.32. China Merchants Bank Co., the country's largest publicly traded lender, gained 0.08 yuan, or 1.2 percent, to 6.67.

China Minsheng Banking Corp., the nation's only privately owned lender, rose 0.07, or 1.7 percent, to 4.14. Huaxia Bank Co. rose 0.09 yuan, or 2 percent, to 4.66. Shenzhen Development Bank Co. (000001), controlled by San Francisco buyout firm Newbridge Capital Ltd., gained 0.17 yuan, or 2.9 percent, to 6.07.

``Investors are still buying bank stocks, confident of their future profitability,'' said Qiu Zhicheng, Shanghai-based banking analyst at Xiangcai Securities Co. ``Lending growth is expected to be steady next year.''

`Trigger Investment'

Property shares also rose, as investors bet the government will encourage people to buy more homes to boost the economy.

``The real estate industry is still the pillar of China's economy, and can trigger investment in other sectors, such as cement, steel and glass,'' said Qiu Liqiang, a trader at China Securities Co. in Beijing. ``What the government is doing is to curb speculation, lower home prices, so that more ordinary people can afford them.''

China Vanke, the nation's biggest publicly traded developer, jumped 0.19, or 4.7 percent, to 4.25. Gemdale Corp. (600383), a developer in Shenzhen, rose 0.08 yuan, or 1.3 percent, to 6.44. Shanghai New Huangpu Real Estate Co., which develops residential and commercial property, gained 0.2 yuan, or 5 percent, to 4.17.

To contact the reporter on this story: Samuel Shen in Shanghai at at Sshen3@bloomberg.net

To contact the editor responsible for this story: James Regan in Hong Kong at jregan8@bloomberg.net


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