16 November 2018

Mainland lenders rebound on fresh liquidity injection

Chinese lenders regained favor on Tuesday after the nation’s central bank injected a fresh round of liquidity into the market.

Hong Kong’s benchmark Hang Seng Index closed 104 points or 0.45 percent higher at 23,033 points. The Hang Seng China Enterprises Index, the main gauge for H shares, rebounded, gaining 1.78 percent to 10,218. The Shanghai Composite index recouped Monday’s losses and finished 0.86 percent up at 2,008 points.

The People’s Bank of China on Monday pumped funds into large commercial banks using its Standing Lending Facility and on Tuesday sold 255 billion yuan (US$42.1 billion) of reverse repurchase agreements. The seven-day repurchase rate, a gauge of interbank funding availability, dropped 88 basis points to 5.44 percent in Shanghai.

Lenders picked up on the news. Industrial & Commercial Bank of China (01398.HK) jumped 2.72 percent and China Construction Bank (00939.HK) rose 2.97 percent. Other financial plays saw gains above 1 percent.

Blue chips barely moved in the session, however. CNOOC (00883.HK) nosedived 6.3 percent, making it the worst performer among the HSI constituents, after the company announced its output target this year will be in a range of 422 to 435 million barrels of oil equivalent. The growth rate is about 2.4 to 5.6 percent from the previous year, which is slower than market expectations.  Interestingly, rival China Petroleum & Chemical (00386.HK) jumped 4.1 percent, placing it exactly on the other end of the spectrum.

Meanwhile, solar-panel makers were under selling pressure during the session. Hanergy Solar Group (00566.HK) tumbled 7.2 percent, Comtec Solar Systems (00712.HK) gave up 5.1 percent, while Solargiga Energy (00757.HK) shed 2.5 percent.

– Contact the writer at [email protected]




EJI Weekly Newsletter

Please click here to unsubscribe