Mainland bank shares soar 49 pc
Bank stocks see substantial rise over past two months, but analysts warn their profit growth will continue to slow amid regulatory reforms
Mainland bank shares have rallied by nearly 50 per cent over the past two months, driven higher by signs of recovery in the world's second-largest economy.
Investor expectations of better bank earnings and rising share prices in the sector have been improving since the release of data that showed the mainland economy expanded by 7.9 per cent year on year in the fourth quarter of last year, quickening from a 7.6 per cent growth in the third quarter.
"The improving macro-outlook is shoring up loan demand and yields, while moderating non-performing loan risk and lowering credit risk," said Lucy Feng, an analyst at Nomura Securities.
Double-digit profit growth announced by four lenders in the past few weeks added to the optimism. In result snapshots before the release of their full earnings reports in March, Shanghai Pudong Development Bank, China Everbright Bank, China Minsheng Banking Corp, and Industrial Bank said their net earnings would be up between 25 and 36 per cent year on year for 2012.
Minsheng shares soared nearly 9 per cent yesterday in Shanghai trading, to close at a historic high of 11.23 yuan.
"In 2013, just hold on to your bank shares," China International Capital Corp told clients in a note on Thursday. "Wait for further share price increases when fund managers build larger positions."