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Surge of bank shares lifts Chinese stocks

(China Daily)
Updated: 2008-12-19 08:00

Related readings:  Chinese shares advance in morning session after US rate cut  Chinese shares open 1.17% higher on policy boost  Chinese shares rise 3.57% on major economic conference  Chinese shares open 0.73% higher

China's stocks rose for a fourth day, lifting the key stock index to its highest in a week. China Merchants Bank Co and other lenders jumped on speculation that the government would cut their taxes before the year-end to boost earnings.

China Vanke Co and real estate developers climbed after the government unveiled policies to boost the property market. China Life Insurance Co rose after reporting its 11-month premium income rose 53 percent.

The CSI 300 Index, which tracks yuan-denominated A shares traded on the Chinese mainland's two exchanges, climbed 43.68, or 2.2 percent, to 2,045.10 at the 3 pm local-time close, bringing this week's gains to 4.3 percent. Financial stocks rose the most among the 10 industry groups.

Banks are going higher because there is speculation the government will cut their business tax to protect their profitability, said Mo Fan, an analyst at Soochow Asset Management Co in Shanghai.

Chinese banks, which posted a combined 67 percent jump in first-half profit on increasing loans, are expected to report declining earnings in 2009 as an expected drop in interest rates shrinks margins, HSBC Holdings Plc said last month.

Merchants Bank, China's fifth-biggest bank by market value, rose for the first time in six days, gaining 5.8 percent to 13.66 yuan. Shanghai Pudong Development Bank Co, part-owned by Citigroup Inc, surged 7.5 percent to 14.83 yuan. Shenzhen Development Bank Co, controlled by US buyout firm TPG Inc, jumped 5.8 percent to 10.60 yuan.

China imposes 5 percent business tax on the revenue earned by banks, insurers and brokerages.

Vanke, China's biggest estate developer, rose 3 percent to 7.81 yuan. Poly Real Estate added 0.1 percent to 18.34 yuan.

China will reduce a tax on home sales to stem a property- market slump. Sale profits, rather than prices, will now be taxed. The levy will be waived on properties sold two years after purchase, down from five years, the government announced yesterday.

China Life, the country's biggest insurer, climbed 4.6 percent to 21.06 yuan after saying its 11-month premium income rose 53 percent to 280.8 billion yuan from a year earlier. Ping An Insurance (Group) Co, the second-largest, jumped 7.2 percent to 29.56 yuan.

The Shanghai Composite Index rose 2 percent to 2,015.69. The Shenzhen Composite Index gained 1.6 percent to 617.27.

Agencies