Mainland markets continue rise as Hong Kong falls on reports of stiffer bank regulation
Mainland markets continued to rise today while Hong Kong retreated as China Mobile posted its slowest profit growth since listing in 1997 and reports resurfaced that Beijing may tighten capital requirements for bank lending.
The Shanghai Comprehensive Index advanced 1.69 percent as banks led rises, bringing its the weekly loss to 2.83 percent. The Shenzhen Composite Index gained 2.09 percent to 118920.2.The SME Comprehensive Index added 2.91 percent to 4301.86.
The Hang Seng Index dropped 0.64 percent to 20199.02, bringing the weekly drop to 3.3 percent. The Hang Seng China Enterprise Index, which tracks major mainland companies listed in Hong Kong, slid 0.47 percent to 11464.73.
Taiwan's TAIEX Index dropped 1.16 percent to 6654.80.
Industrial & Commercial Bank of China (SH:601398; HK:0398), the world's largest lender, gained 2.32 percent in Shanghai trading, after announcing yesterday that first half net profit increased 2.8 percent year-on-year.
ICBC made RMB 825.54 billion in new loans in the first half, 9 percent of the China's nation's record RMB7.37 trillion so far this year, without increasing its provisions for bad loans.
While the news brought banking shares up in Shanghai, resurfacing press reports that China is planning to curb lending by tightening capital requirements brought the same banks down in Hong Kong.
China Construction Bank (SH:601939;HK:0939), the nation's second-largest lender, advanced 3 percent in Shanghai but slid 0.9 percent in Hong Kong. Bank of China (SH:60198, HK:3988) rose 1.2 percent in Shanghai and down 0.8 percent in Hong Kong. Bank of Communications (SH:601328, HK:3328) rose 0.7 percent in Shanghai and fell 0.2 percent in Hong Kong.
China Mobile (HK:0941, NYSE:CHL), the world's largest phone carrier, dropped 3.44 percent to a four week low, after Chief Financial Officer Xue Taohai said the company can't sustain its current levels of profitability in the long term. The company's second-quarter profit declined to RMB 30.1 billion from 30.6 billion of last year.
Its competitors China Telecom (HK:0728, NYSE:CHA) and China Unicom (NYSE:CHU, HK:0762, SH:600050) added 0.52 percent and dropped 0.9 percent in Hong Kong, respectively.
Focus back on Chongqing as state enterprises encouraged to become more public
Premier Wen Jiabao yesterday re-emphasized that investing in China's western, inland provinces was the key to stimulating consumer demand in China. As the major hub in the region, Chongqing was the focus for a lot of financial stories today with the city's government pledging to encourage key state-owned enterprises to float more shares on stock markets in order to bring further investment to the region.
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