Market gains at the break on interest rate cut - ResearchInChina

Date:2008-10-30liaoyan  Text Size:

SHANGHAI’S key stock index closed higher in the morning session today thanks to gains among financial shares after the central bank lowered borrowing costs for the third time in two months to stave off a sharp slowdown in the world's fourth-largest economy.

The Shanghai Composite Index added 1.16 percent, or 20 points, to 1,739.81 points at 11:30am.

Gainers outnumbered losers 428 to 334 while 60 did not change.

The Shenzhen Composite Index, which tracks the smaller domestic market, was up 0.45 percent, or 2.14 points, to 474.51 points in the morning session.

Shanghai Pudong Development Bank Co, part-owned by Citigroup Inc, climbed 2.61 percent to 12.17 yuan (US$1.78) after third-quarter profit more than doubled to 3.47 billion yuan on higher interest income and lower bad debt provisions.

China Merchants Bank Co, the nation's fifth-biggest bank by value, said third-quarter profit rose 49 percent to 5.75 billion yuan because it earned more non-interest income while income tax fell. China Merchants gained 1.62 percent, to 11.91 yuan.

Bank of China Ltd, the nation's largest foreign-exchange lender, rose 1 percent to 3.02 yuan. The bank said third-quarter profit rose at the slowest pace in two years as credit-market losses increased and loan demand declined in China. Net income climbed 11.5 percent to 17.8 billion yuan in the three months ended September 30 from 15.9 billion yuan a year earlier.

The People's Bank of China reduced its benchmark one-year lending rate to 6.66 percent from 6.93 percent, according to a statement on its Website late yesterday. The deposit rate will drop to 3.6 percent from 3.87 percent.

This was the third interest cut in six weeks, which was seen as part of a widely expected new round of global rate cuts.

China Vanke Co led gains among real-estate developers on speculation cheaper mortgages will boost property sales.

China Vanke Co, the country's largest real estate developer by market value, gained 2.54 percent to 6.05 yuan and Poly Real Estate Group Co, the second biggest, also increased 2.54 percent to 14.15 yuan.

On the losing side, Baoshan Iron & Steel Co, China's biggest steel maker, fell after third-quarter profit missed market expectations.

Baoshan Steel dropped 1.30 percent to 4.54 yuan. The company’s shares have plunged 74 percent this year in Shanghai trading, performing worse than the 69 percent drop in the Shanghai key index.

The global economic slowdown since June curbed demand by builders and car makers, damped prices and turned Chinese mills unprofitable in October, the China Iron & Steel Association said. Baoshan Steel said market conditions will be more severe in the next five months.

Bright Dairy & Food Co, a Chinese milk company whose products were found to be tainted with the hazardous chemical melamine, also fell after saying it may post a loss for this year.

The stock slid 5.18 percent to 3.48 yuan.

Third-quarter net loss was 271 million yuan, compared with a 39.1 million yuan profit a year earlier, Shanghai-based Bright said in a filing to the city's stock exchange today. The company will post a full-year loss, compared with 2007's profit of 212.9 million yuan, it said in a separate statement.


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