China Construction Bank +6,7%

2007-6-18   11:50:00 a.m. HKT, XFNA

China Construction Bank extends gains in HK on A-share issue

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HONG KONG (XFN-ASIA) - China Construction Bank (CCB) shares were sharply higher in morning trade, extending last week's gains after the bank announced plans to issue up to 9 bln A-shares for a listing in Shanghai.

At 11.45 am, the stock was up 0.33 hkd or 6.72 pct at 5.23, off a high of 5.26, after gaining nearly 7 pct last week.

CCB said the A-share issue will strengthen its capital base and provide a new financing platform.

Bank of America Corp is a strategic investor in CCB, owning 8.52 pct of the mainland lender.

(1 usd = 7.8 hkd)

BROKER CALL - China Construction Bank at 'buy/medium risk' - Citigroup



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BEIJING (XFN-ASIA) - Citigroup said it has a ""buy/medium risk"" rating on China Construction Bank (CCB) after the lender announced it will issue up to nine bln new shares in the A-share market.

""The A-share listing will benefit CCB as it will provide an additional channel to raise capital at a low cost where proceeds can be used to strengthen the capital base, expand its business and enhance franchise values, "" Citigroup analyst Tracy Yu said in a note.

She added that the move by CCB is in-line with other Chinese financial institutions, such as Bank of Communication, China Life and Ping An, which all recently listed in Shanghai.

CCB has yet to announce the details of the A-share IPO price and listing date. These are subject to approval by shareholders as well as the regulators.

Citigroup has a 5.5 hkd target price on CCB.

CCB's shares were up 5.09 pct at 5.16 hkd this morning in Hong Kong.



(1 usd = 7.8 hkd)

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China's CCB plans expansion overseas; sees regulatory hurdles in US

China Construction Bank (CCB) (HK 939, SHA 601939), one of the country's five biggest state-owned banks, is seeking to expand its presence overseas, but it is encountering regulatory difficulties in the US as regulators there are restricting its access to the market, according to its chairman Guo Shuqing.

Guo told reporters during the 17th Communist Party Congress that CCB will continue to look into opportunities overseas, including Japan, but he said the bank's efforts to open branches in the US have not yet made any progress, adding that Washington is treating Chinese firms unfairly.

""We have applied to set up branches in the US, but we have been subject to unequal treatment,"" Guo said.

He noted that CCB could enter into retail banking operations in the US, even though Bank of America -- which holds a strategic stake in CCB -- has agreed not to do such business here in China.

""According to the agreement that we signed, we can set up branches in US for retail banking operations,"" he said.

Guo added that if CCB were to set up in the US, it would not impact BoA's operations there, while the Chinese lender could also introduce clients to the US bank.

Guo said CCB aims to expand in countries that have a strong relationship with China, but he did not give details of specific targets.

'I cannot tell you who we want to acquire as that is a commercial secret, "" he said.

He added, however, that CCB is not currently interested in taking a stake in US investment bank Bear Stearns.

China's Citic Bank is reportedly interested in taking a stake in Bear Stearns.

Separately, Guo said CCB has measures in place to deal with potential overheating in the personal loan and housing loan markets.

He said CCB's debt quality has improved, but he added that rules on the provision of private credit remain unclear.

CCB joined the Shanghai Composite Index yesterday after listing on the mainland market on Sept 25.  

* China Construction Bank surged 4.2 percent to HK$7.65 after Goldman Sachs raised the stock's rating to buy and its target price for the shares to HK$8.45 from HK$7.95 due to strong earnings growth.

CCB  is likely to finish a typical consolidation along the 10-day moving average where it is now at $7.35. The share poises to resume its major upward trend again. Since the conventional funds continue to accumulate the Chinese Banks, this counter gains strength to climb. Moreover it has sound fundamentals for the earnings outlook is positive. In the meantime, RSI-14 holds above the 60-mark level, which indicates the counter to be on the strength side. Stochastic Oscillator is going to give a buying signal. Therefore, both technical indicators suggest it to advance soon. By technical analysis, the share price gains strength and poises to set a new record high again.