Banking

China Stock Shares

China shares rose on light volume on Tuesday helped by defensive sectors, though may follow Hong Kong stocks lower as investors persistently move money out of commodity-related sectors on uncertainty over the growth outlook.

Utilities, in particular independent power producers (IPPS), outperformed on expectations that power shortages in China would boost demand while a stall in the commodity rally continued to weigh on cyclical stocks such as oil and coal producers.

Hong Kong's Hang Seng ended down 0.4 percent as large cap financials shed early gains despite Chinese banks reporting robust first-quarter results last week. The China Enterprises Index of top locally listed mainland companies fell 0.8 percent.

In China, the Shanghai Composite Index ended up 0.7 percent at 2,932.2 but A-share turnover at 9.6 billion yuan remained 20 percent below the average over the past month, suggesting a lot of investors were cautious about participating in markets.

"The rebound today is not supported by volume, so it's likely to be a short-term rebound after a sharp dip in some sectors," said Cao Xuefeng, head of research at Huaxi Securities in Chengdu.

China should take the lead in formulating a single currency for Asia, given the large size of its economy, suggested Lim Siang Chai, Malaysia's deputy minister of finance.

A unified currency in Asia, where most countries are emerging economies that might easily attract hot money inflows from industrialized nations, could help diminish the risk of exchange rate fluctuations and help boost the region's trade, said Lim in an exclusive interview with China Daily.

"Without China's leadership, it's hard for Asia to achieve the goal of having a solitary currency," Lim said.

He added that, amid increasing trade between China and the Association of Southeast Asian Nations (ASEAN) since the implementation of the China-ASEAN Free Trade Area, a single currency would also reduce the cost of transactions for the settlement of trade.

Some bank outlets in Shanghai have suspended mortgage loans to home buyers, the China Securities Journal reported Thursday.

An anonymous developer said, the Shanghai outlets of the China Industrial and Commercial Bank, the Agricultural Bank of China, the China Minsheng Banking Corp Ltd and the Industrial Bank Co Ltd all suspended issuing loans. "Banks do want to lend, but they may have no money for lending" the developer said.

China has raised the reserve ratios for banks nine times since last year, and 3 trillion yuan of banks' capital has been frozen as a result.

Sources with the above mentioned banks said they have not stopped mortgage loans, but have more strict requirements for granting these loans.

China construction Bank

China Construction Bank (CCB), the country's second largest lender by market value, said Sunday that its net profits rose 26.39 percent year on year to 135 billion yuan ($20.45 billion) last year.

Also, earnings per share rose to 0.56 yuan from 0.45 yuan one year earlier, the Beijing-based bank said in a statement filed at the Shanghai Stock Exchange.

The lender noted that its increased profits were largely due to rising net interest income and commissions.

Net interest income, or revenue from borrowers minus interest paid to depositors, climbed 18.7 percent to 251.5 billion yuan last year, while commissions and income from fee-based services gained 37.61 percent to 66.13 billion yuan.

The bulk of economists surveyed by The Wall Street Journal would bet on the Chinese yuan rising over the next three years and the euro falling–but they’re split on the direction the U.S. dollar is likely to take.

The Journal surveyed 54 economists, not all of whom answer every question and most of whom are U.S.-based, and asked which one currency they would bet on rising in value over the next three years. Eighteen, or 43% of the 42 who responded to the question, pointed to the Chinese yuan. “Chinese inflation makes artificially low values difficult to sustain,” said Sean M. Snaith of the University of Central Florida.

Twelve economists, or 30% of 40 respondents to the question, chose the euro as the most likely to decline in value over that same period. “The debt crisis still has more iterations to go, which will rattle currency markets,” said Diane Swonk of Mesirow Financial.

And the dollar? Eleven said they would bet the greenback will rise in value over the next three years and exactly the same number said they would bet on its value declining.