Time ripe to invest in banking sector

(Xinhua)
Updated: 2007-06-04 17:11

She was surprised at the bank's strong performance after the tax increase.

Qiu said the banking sector was not the target of the latest regulatory move, which is why banks' market performance will not be deeply affected by the stamp duty increase.

She Minhua, a China Securities Co analyst, echoes his view.

"The banking sector is likely to be the next hot runner in trading, with sentiment returning to reasonable," She said. "Bank shares are more for investment, unlike other shares for short-term profit-taking on speculation."

Most Shanghai-listed banks gained less than the broad market this year, with Shanghai Pudong Development Bank and Huaxia Bank as exceptions.

Haitong's Qiu rates mid-sized banks like Merchants Bank and Minsheng Bank as most valuable and rates them a "buy."

Advisers rate most listed banks as "undervalued" in a "safe-to-invest" status, except newly listed China Citic Bank and Bank of Communications. Citic Bank has risen 15 percent since its yuan-backed A shares were listed on April 27. BoCom has dipped 5.6 percent since its A-share debut on May 15.

Citic Bank is rated as over-valued while BoCom is rated as "cautious buying" by Yahoo finance.

"The banking sector is always a good middle-term investment product," said Wu Kan, a Shanghai Securities Consulting Co analyst. "For those investors who don't want to take big risks in the stock market, banks will be good choices."

Chinese investors opened 426,162 brokerage accounts on Wednesday, well above the daily average for the year, hard on the heels of the stamp duty increase.

This quarter's daily average was about 300,000, according to figures from the China Securities Depository & Clearing Corp.

Authorities have taken various steps to cool a rally that has turned Chinese stocks into Asia's most expensive.