China markets extend rebounds

March 19 -- The Shanghai Composite Index rebounded 0.23 percent or 5.45 points to close at 2,410.18 points today on transaction value of 102.98 billion yuan.

The Shenzhen Component Index rose 0.16 percent or 16.86 points to close at 10,296.17 points today on transaction value of 93.33 billion yuan.

Both bourses opened slightly lower, and trading was volatile. There was a plunge in later morning trading. The hospitality, tourism and water conservancy sectors led the rebound in the afternoon session.

Top Headlines:

According to CICC, the current average P/E ratio of 12.5 times for shares of companies in the Shanghai Composite Index is still at historic low levels despite a small rebound.

The Chinese investment bank said those sectors which had rebounded the most thus far this year have high valuations, and a number thus had valuation risks.

According to Guodu Securities, stock mutual funds had average holdings of 77.81 percent last week, up 1.18 percentage points week-on-week.

Institutional investors anticipate new loan growth of 800 billion yuan in March, with a gradual rise in demand for credit following the Spring Festival.

The country is likely to fail to meet its goal of extending 2.4 trillion yuan worth of new loans in the first quarter due to lower demand from large enterprises.

Through the end of last week, CSRC had reviewed 531 initial public offering applications, including 314 seeking to list on the main board and another 217 planning to list on the ChiNext board.

It was reported that Juneyao Airlines and Spring Airlines, the only two private airlines, are on the list. The former is targeting  high-end commercial passengers, while the the latter is positioning itself at the low-cost segment.

Peng Wensheng, Chief Economist at CICC, said if capital continued to flow out of China in February, the low level of funds outstanding for foreign exchange will bring pressure on the nominal supply of liquidity, leading to a cut in the reserve ratio.

Equity Movers:

Led by Xian Tourism (000610, 8.44, +10.039%), Shanghai Nine Dragon (600555, 4.31, +9.949%) and Xian Catering (000721, 8.64, +5.49%), companies from the hospitality sector surged in morning trading.

Financials traded mixed, and Sealand Securities (000750, 16.30, +3.426%), Soochow Securities (601555, 8.56, +3.382%) and Everbright Securities (601788, 12.97, +1.328%) rose.

Industrial Bank (601166, 13.64, -0.511%), China Minsheng Bank (600016, 6.33, -0.628%) and Hua Xia Bank (600015, 10.98, -0.363%) retreated.

Insurers, such as, Ping An Insurance Group (601318, 39.01, -1.340%), China Life Insurance Company (601628, 17.06, -1.159%) and New China Life Insurance (601336, 30.51, -0.909%), underperformed.

Poly Real Estate (600048, 10.73, -0.832%), Gemdale Corporation (600383, 5.75, -0.519%) and China Vanke (000002, 8.22, -0.60%) retreated.

Cement makers rose another day, with Sichuan Shuangma Cement (000935, 8.71, +2.834%), Jiangxi Wannianqing Cement (000789, 12.43, +1.969%) and Huaxin Cement (600801, 14.98, +1.628%) up more than one percent.

Spirits makers fell today as investor realized profits, with Qinghai Huzhu Barley Wine (002646, 25.73, -5.055%), Shanghai Jinfeng Wine Company (600616, 13.05, -3.619%) and Jiugui Liquor (000799, 32.25, -2.715%) down by more than two percent.