Monday February 23, 05:04 AM
Property boosts China stocks, Shenzhen Bank soars
By Claire Zhang
SHANGHAI, Feb 23 (Reuters) - China's stock market rose on Monday, led by property shares after official media said the government was considering a package of measures to provide long-term support for the residential housing market.
Shenzhen Development Bank (000001.SZ - news) jumped its 10 percent daily limit to 14.99 yuan on renewed speculation that China Development Bank might buy a stake in it.
The Shanghai Composite Index spent most of the morning lower but was up 0.43 percent at 2,271.101 points at midday. Rising Shanghai A shares outnumbered losers by 756 to 166.
Turnover in Shanghai A shares, which dropped for three straight days last week as inflows of fresh money into the market slowed, rebounded to a heavy 65.6 billion yuan ($9.6 billion) from Friday morning's 50.4 billion yuan.
The property subindex gained 3.55 percent, with Vanke up 4.39 percent to 8.08 yuan, on the media reports about policies to stimulate the sector, which were said to include an end to curbs on purchases of second homes. It was not clear when such steps might be approved or take effect.
The stock market has been discussing for several months the possibility that U.S. private equity firm Newbridge Capital (NBC-P.V - news) , which owns a major stake in Shenzhen Development Bank, might sell all or part of it to China Development Bank, which could give the Shenzhen bank a powerful new partner. Company (CPNY3.SA - news) spokesmen could not immediately be reached to comment.
The Economic Observer Online (www.eeo.com.cn) quoted unnamed sources as saying on Sunday that China Development Bank was discussing a takeover of or a major stake purchase in Shenzhen Bank, and that a proposal had been made to the banking regulator.
Shenzhen Bank's leap dragged up some other banking stocks, particularly smaller ones; Bank of Ningbo rose 4.58 percent to 9.13 yuan. It reported late on Friday that 2008 net profit gained 40 percent, though growth slowed sharply in the second half of the year.
MEDIUM TERM
Many analysts remain sceptical that the stock market can continue rising in the medium term. Some funds were seen cutting their exposure to stocks when the main index rose above 2,300 points earlier this month.
Local media reported that 6.4 billion shares in 23 listed firms would become tradable this week as lock-up periods for institutional investors expired, adding to supply pressures.
And the official Securities Times, quoting sources at big banks and analysts, estimated on Monday that new yuan lending in February would drop sharply to about 500 billion yuan from 1.62 trillion yuan in January.
Such a figure, combined with slumping Chinese and Asian exports, would cast doubt on the sustainability of any early economic recovery in China.
'Even if second home buying is encouraged, sales of property will not rocket in the short term. So the news may just lift stocks for the short term -- the index remains in a consolidation phase,' said Huatai Securities analyst Zhou Lin.
GOLD
Among other gainers, Shandong Gold, Zijin Mining and Zhongjin Gold all jumped over 6 percent on Monday after the global spot gold price rose above $1,000 per ounce on Friday.
Major Chinese engine maker Weichai Power surged its 10 percent daily limit to 28.49 yuan after saying it was buying the assets of a French engine maker for $3.8 million.
Chongqing Changan Auto's A shares and Hong Kong dollar-denominated B shares both surged 10 percent for a sixth straight day, after the company said it would spend up to HK$909 million ($117 million) to buy back its B shares.
Liaoning Guoneng Group, which is involved in steel product logistics, jumped 10 percent for a second straight day to 5.89 yuan. Traders linked this to news late on Thursday that the China Securities Regulatory Commission had approved the launch of steel futures by the Shanghai Futures Exchange.
Guangdong Guanhao High-tech also rose 10 percent for a second day, to 6.73 yuan, after saying it planned to place 60 million A shares at 4.60 yuan each.
Beihai Port slipped 1.23 percent to 10.42 yuan after saying on Saturday that it was indefinitely suspending a plan to buy port assets worth 2.22 billion yuan from its state parent.
($1 = 6.83 Yuan)
(Editing by Andrew Torchia)
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