| Mainland shares gain; Shanghai Automotive rises |
SHANGHAI, June 27 -- DOMESTIC stocks rose for a second day after a government report showed profits generated by industrial companies jumped 42 percent in the first five months. Shanghai Automotive Co gained.
"The figures boosted optimism about first-half earnings for listed companies," said Yan Ji, an investment manager at HSBC Jintrust Fund Management Co in Shanghai, which manages about US$517 million. "Growth is still pretty fast."
China Minsheng Banking Corp advanced after the lender said China Life Insurance Co is now its biggest shareholder, fueling speculation competition for control of the lender will heat up. Shenzhen Development Bank Co dropped on concern recent gains were excessive, Bloomberg reported.
The Shanghai Composite Index, which tracks the bigger of mainland's stock exchanges, rose 2.7 percent to 4,078.60. The Shenzhen Composite Index, which covers the smaller one, added 2.7 percent to 1,176.39.
Shanghai Automotive, China's largest automaker, increased 0.72 yuan (8 US cents), or 4 percent, to 18.95 yuan. Shanghai Zhenhua Port Machinery Co, the world's biggest maker of container cranes, rose 1.42 yuan, or 7.3 percent, to 20.77 yuan. Guangdong Midea Electric Appliances Co, China's second-biggest publicly traded appliance maker, climbed 2.34 yuan, or 7.6 percent, to 33.09 yuan.
Combined net income at industrial companies in the five months to May increased 42 percent from a year earlier to 902.6 billion yuan, the National Bureau of Statistics said today. Total sales jumped 27 percent to 14.2 trillion yuan.
Minsheng Banking, the nation's only privately controlled lender, advanced 0.58 yuan, or 5.2 percent, to 11.70 yuan.
China Life Insurance, the biggest insurer, owns a 6.2 percent stake in Minsheng, unseating Chinese billionaire Liu Yonghao as the largest shareholder, the lender said today. Ping An Insurance owns 4.9 percent of Minsheng, making it the fourth-largest investor, and last week won approval to buy Ping An Bank.
"The key question is: What's China Life up to?" said Gu Zhonghan, a bank analyst at Shenzhen-based E Fund Management Co, which owned 91 million shares of Minsheng Bank as of December 31. "If it's aiming to become a financial conglomerate like Ping An, then that'll probably kick-start a battle for control. If it only wants to make some quick gains, we'll see some paring of its stake later."
China Life climbed 1.50 yuan, or 3.5 percent, to 44.91 yuan. Ping An Insurance, China's No. 2 insurer, gained 2.99 yuan, or 4.1 percent, to 76.18 yuan.
China Merchants Bank Co, which has the biggest weighting in the CSI 300, rose 0.82 yuan, or 3.4 percent, to 25.32 yuan. The lender said irregularities and compliance breaches uncovered during a government audit last year won't have any ``material'' impact on its financial statements.
A Xinhua report said lawmakers will today review a plan to lower the rate of tax on interest income, a move that would make bank savings a more attractive investment and may divert capital away from equities.
The National People's Congress Standing Committee will today review the plan to remove or cut the tax currently levied at 20 percent, Xinhua said without giving more details. The parliament's press office in Beijing declined to comment.
About 27 million brokerage accounts have been set up this year, five times the total for 2006, official figures show. Household yuan deposits fell by 278.4 billion yuan in May, after sliding in April for the first time since February 2003, according to the central bank.
Shenzhen Bank, controlled by buyout firm TPG Inc., plunged 2.98 yuan, or 8.5 percent, to 32.22 yuan after falling by as much as the 10 percent daily limit. The shares jumped 23 percent within three days after it resumed trading on June 20, as it completed a program to trade publicly shares held by major shareholders.
"Shenzhen Bank's shares have risen too fast and aren't justified by earnings now," said Sun Chao, an analyst at Citic Securities Co in Shanghai.
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