Bank of China
Bank of China
Bank of China is one of the big four state-owned commercial banks of the People's Republic of China – the other three are Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China. Bank of China was founded in 1912 to replace the Government Bank of Imperial China, and is the oldest bank in China. From its establishment until 1942, it issued banknotes on behalf of the Government of the Republic of China along with the "Big Four" banks of the period: the Central Bank of China, Farmers Bank of China and Bank of Communications. Although it initially functioned as the Chinese central bank, in 1928 the Central Bank of China replaced it in that role. Subsequently, BOC became a purely commercial bank.
Property outlook brightens on PBOC cut
An unexpected interest rate cut announced by the People's Bank of China on Thursday is almost certain to help a fragile recovery in the mainland's property market, analysts say, as they predict further gains for property stocks in the coming months.
But they warned that any potential rise in housing prices could spark a swift response from the central government in the form of another round of measures to cool the sector.
'After a lukewarm start to the year, listed mainland developers saw property sales pick up, with most reporting stronger contracted sales in June,' said property analyst Alan Jin, of Mizuho Securities Asia, yesterday.
Supported by pent-up demand, China Vanke, the mainland's biggest property developer by market value, said on Wednesday that contracted sales reached 13.3 billion yuan (HK$16.34 billion) last month, a 24 per cent jump from May. Longfor Properties reported a day later that June sales rose 35 per cent month on month from May to 4.54 billion yuan.
The PBOC said it was cutting the one-year lending rate by 31 basis points to 6 per cent and the one-year deposit rate by 25 basis points to 3 per cent, with immediate effect.
This is the second rate cut in a month, following a cut on June 7, and lifted property shares yesterday.
In Shenzhen, China Vanke rose 3.88 per cent to 9.65 yuan per share.
In Hong Kong, Evergrande Real Estate closed up 6.55 per cent at HK$4.39. China Overseas Land and Investment rose 4.83 per cent to HK$19.12, while Longfor Properties rose 2.66 per cent to HK$13.14. The benchmark Hang Seng Index closed the day virtually flat.
The central bank separately warned banks to continue suppressing speculative investments in housing, reflecting the government's concern that moves to help the broader economy could reignite the real estate sector.
Analysts said home prices would continue to rise and sales would jump despite the PBOC's warning.
'In the short term, the housing market will benefit, with both prices and sales rising,' Credit Suisse property analyst Du Jinsong said.
Surging house prices might prompt the government to impose tougher policies that would eventually bite, and force a correction in the sector. 'Even if this happens, it won't happen overnight so the property market will rebound for the next two months, as will property stocks,' Du said.
Listed mainland companies would continue to see their share prices rise, he said.
The number of basis points cut in lending and deposit rates four weeks ago - the PBOC's first reduction in interest rates since 2008