Money
Shares rebound as market adjusts
By Irene Shen and Zhang Shidong (China Daily)
Updated: 2011-06-22 11:19
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SHANGHAI - Stocks on the Chinese mainland rose, with the benchmark index climbing the most in a week, as property and cement companies rallied on an improving profit outlook and on speculation the market's slide has been excessive.
Anhui Conch Cement Co jumped to the highest in two months and a gauge of real-estate stocks surged 1.1 percent after the Shanghai Securities News said local governments will be allowed to sell bonds to fund public-housing construction. Jiangxi Copper Co paced increases by raw-materials companies after prices rose.
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, added 25.23 points, to 2646.48 at the 3 pm close, rebounding from the lowest closing level since Sept 29.
"The excessive losses call for a rebound for the short term," said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co, which oversees $285 million. "But it can only be defined as a technical rebound as the macro situation hasn't changed. Overall, the market is still going to suffer from tight liquidity."
The central bank has raised reserve requirements 12 times and interest rates four times since the start of last year. The stock index has lost 5.8 percent this year, extending the 14 percent retreat in 2010.
The Shanghai gauge is valued at 12.3 times estimated earnings for this year, compared with a record low of 11.9, according to weekly data compiled by Bloomberg.
Anhui Conch gained 4.3 percent to 26.30 yuan ($4.07), the highest since April 22. Huaxin Cement Co rose 3.4 percent to 23.38 yuan.
The National Development and Reform Commission will allow local government financing vehicles to sell bonds to fund the construction of affordable housing, the Shanghai Securities News reported, citing a notice issued by the commission.
Priority for approvals will be given to applications to sell such debt, the newspaper reported. Other companies that "meet conditions" are also allowed to sell bonds to finance the construction of affordable housing projects, the paper said.
China Vanke Co, the nation's largest developer by market value, increased 1.1 percent to 8.27 yuan. Poly Real Estate Group Co gained 1.1 percent to 10.54 yuan.
Industrial and Commercial Bank of China Ltd, the world's largest bank by market value, rose 0.9 percent to 4.30 yuan. China Construction Bank Corp added 0.4 percent to 4.94 yuan.
The 57 banks and developers on the CSI 300 gauge slid to a record 8.8 times estimated earnings in the week ended June 3, and were at 9.14 on June 17, according to weekly data compiled by Bloomberg. The multiple for the CSI 300 is 12.8 times, the lowest since January 2009.
"When you rule out financial companies, stocks are actually not cheap and most of them are still way above their valuation bottoms," said Li Jun, a strategist at Central China Securities Co in Shanghai. Jiangxi Copper increased 3.3 percent to 33.39 yuan, the most since June 14.
Bloomberg News
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