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 [ZT] China Acts To Deflate Stock Bubble |
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sapientaf
头衔: 海归上校
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加入时间: 2006/08/20
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来自: 弯曲，上海，班格罗尔，北京，新加坡
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作者：sapientaf 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
China Acts To Deflate Stock Bubble
Vivian Wai-yin Kwok, 01.09.07, 1:14 PM ET
December was hot for the Chinese stock markets, in all likelihood too hot: Mainland insurers listed in Hong Kong saw their shares rise more than 50%, while banking stocks in general were up more than 35%. The mainland H-shares listed in Hong Kong were up an aggregate 17%, while the A shares for domestic investors in Shanghai soared 25%.
Such parabolic trajectories are obviously unsustainable, and the Chinese government launched a policy to curb the rally on Monday, while JP Morgan issued a warning to the investors.
In order to discourage the bubble caused by the new listings, the Shanghai Stock Exchange altered its index calculations. New issues will no longer be counted in the indexes during their first 10 days of trading. That means that even though China Life Insurance (nyse: LFC - news - people ) closed at 38.93 yuan ($4.99) on the first day of it’s a-shares trading in Shanghai on Tuesday -- more than double its IPO price of 18.88 yuan ($2.42) -- it hasn’t push up the barometers and fed the craze.
This new policy came out on three days after The People’s Bank of China, the country’s central bank, tightened up the monetary supply by raising the reserve requirement ratio of Chinese banks by 50 basis points last Friday.
These measures were implemented in the wake of the Chinese stock mania in December. In a single month, the biggest gainers among Chinese stocks included Industrial and Commercial Bank of China, developer Beijing Wangfujing and Jilin Yatai Group, a cement producer, which rocketed 63%, 62% and 61%, respectively, in Shanghai. Across the border, PICC Property & Casualty (other-otc: PPCCF - news - people ), Ping An Insurance (other-otc: PNGAY - news - people ) and China Life Insurance shot up 66%, 61% and 50%, in Hong Kong.
The Asia Pacific equity research team of JP Morgan on Monday downgraded China Life Insurance and PICC Property & Casualty to underweight from overweight and lowered Ping An Insurance’s rating to neutral due to overvaluation.
JP Morgan set the target price of China Life Insurance at $17 Hong Kong dollars ($2.20) and sees a downside potential of more than 30% from its closing price of $26.10 Hong Kong dollars ($3.30) last Friday. China Life is the biggest life insurer in China and the world’s third-biggest insurance stock in terms of market capitalization. Even JP Morgan forecasts its net profit, as a result of investment gains in Chinese stocks, will increase by 85%, to 17.2 billion yuan ($2.2 billion), its price-to-earnings ratio will still hover over 41 (the historical P/E of H shares in Hong Kong is almost 80). The relevant figures for life insurers elsewhere such as AIG (nyse: AIG - news - people ) in United States, Manulife (nyse: MFC - news - people ) in Canada, and Prudential (nyse: PUK - news - people ) in Britain are 13.1, 16.2 and 28.5.
JP Morgan also warned investors to avoid the banking and real estate sectors.
作者：sapientaf 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 [ZT] China Acts To Deflate Stock Bubble -- sapientaf - (3022 Byte) 2007-1-10 周三, 08:02 (994 reads)
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