Ping An Bank shares to come under pressure after lock-up ends

PUBLISHED : Monday, 04 August, 2014, 2:55pm
UPDATED : Tuesday, 05 August, 2014, 7:31pm

Concerns over local government debt will likely push down Ping An Bank's Shenzhen-listed shares this week as more than 33.6 billion yuan (HK$42.13 billion) in stock is freed up for trading today, analysts say.

The Ping An shares will hit the market this week among nearly 700 billion yuan in shares from 18 companies as they come out of a regulatory lock-up period.

The growing risk from local government debt on the mainland and potential defaults at property and materials companies could drive down Ping An Bank's price as the shares come on to the market, said Chen Xingyu, a Shanghai-based bank analyst at Phillip Securities. But the decline would be temporary as the concerns are system-wide and concentrated on smaller mainland banks, not specific to Ping An's fundamentals, he said.

"Lots of banks are facing the same problems," Chen said. "It's a systematic risk. The market already has a perspective on this."

Any dip in the mid-sized bank's share price would likely correct as fears over an economic slowdown on the mainland wane in the second half of the year.

The mainland's biggest banks have rallied since late July on positive economic data after several months of uncertainty.

The HSBC/Markit flash China manufacturing purchasing managers' index hit an 18- month high of 52 in July, up from 50.7 in June and a full percentage point above analysts' expectations.

Shares of the mainland's four biggest banks have climbed an average of 5.67 per cent in Shanghai since the report was released on July 23. Agricultural Bank of China has rallied 7.6 per cent.

The prospects for an October implementation of Shanghai-Hong Kong Stock Connect, a trading scheme that will let traders in the two cities buy shares across the border, has also helped to boost the shares of the Big Four banks, Chen said.

Smaller banks, including Ping An, have not reaped the same benefits.

Ping An Bank has a market capitalisation of 123 billion yuan. The bank's shares closed up 2.15 per cent yesterday, in line with a rising broader market.

About 10 billion yuan worth of shares from Shenzhen-traded Enlight Media would also begin trading on the market this week.