Chinese banks rose in Hong Kong for a second day after economic data signaled a recovery in growth, easing concerns that bad loans will increase.

2. Chinese Banks Rally in Hong Kong on
Signs of Economy Stabilizing
Source
Chinese banks rose in Hong Kong for a
second day after economic data signaled
a recovery in growth, easing concerns
that bad loans will increase.

3. China Minsheng Banking Corp. (1988), the
nation’s first privately-owned lender,
climbed 13.2 percent yesterday and today,
the biggest two-day gain since the stock
began trading in Hong Kong in November
2009. China Merchants Bank Co. (3968)
rose 11.6 percent and Agricultural Bank of
China Ltd., the country’s third-biggest
lender, gained 9.6 percent. Hong Kong’s
benchmark Hang Seng Index rose 3.4
percent on this week’s first two trading days.

4. An acceleration in July industrial output and
better than expected increases in exports
and imports signaled growth in the world’s
second-biggest economy is stabilizing.
Lending data released after markets closed
Aug. 9 showed bank credit accounting for
the largest percentage of total financing
since September 2011, suggesting efforts to
curb shadow banking are taking effect,
according to Daiwa Capital Markets Hong
Kong Ltd.

5. The lending data is “helping alleviate investor
concerns over the risk of shadow banking,” Grace
Wu, a Daiwa analyst in Hong Kong, said by e-mail
today.
An increase in less regulated lending outside the
banking system and borrowing by local governments
has made it more difficult to gauge China’s total
outstanding debt, according to Fitch Ratings’
Charlene Chu. Fitch cut China’s long-term local-
currency debt rating in April, citing rising risks to the
country’s financial stability given the lack of
transparency for credit.

6. Bank Shares
Industrial and Commercial Bank of China Ltd.,
the nation’s biggest lender, rose 6.2 percent in
Hong Kong in two days. China Construction
Bank Corp. (939) climbed 6 percent and Bank of
China Ltd. gained 5.7 percent.
China Merchants Bank surged 7.2 percent today
after the Apple Daily newspaper reported that it
may announce terms for a 35 billion yuan ($5.7
billion) share sale on Aug. 16. The bank has
postponed the sale twice.

7. Investors will be “relieved” by the news, Jim Antos, a
Hong Kong-based analyst at Mizuho Securities Asia
Ltd., wrote in a note today, raising his
recommendation on China Merchants Bank’s shares
to neutral from underperform.
Agricultural Bank of China’s shares rose this week
after the South China Morning Post reported
yesterday that it would lend the city of Shanghai 250
billion yuan. Such a loan may indicate that China’s
central government is ready to loosen credit to boost
economic growth, said Edmond Law, a Hong Kong-
based analyst at UOB Kay Hian Ltd.

8. “Investors see overall macro improving,” Law
said by phone today. “That’s why they are buying
the stock.”