Dec. 23 (Bloomberg) -- China’s stock-index futures rose, signaling gains for the benchmark index, on higher commodity prices and speculation the government will delay increasing interest rates to support the nation’s banks.
Industrial and Commercial Bank of China Ltd. may lead lenders higher as Mizuho Securities Asia forecast China will delay rate increases to next year. PetroChina Co. Ltd. may pace gains for oil producers after crude rose to the highest level in more than two years. China CNR Corp. may rise after signing contracts worth of worth a total 2.7 billion yuan ($406 million).
January futures on the CSI 300 Index, the most active contract, climbed 0.2 percent to 3,250.20 as of 9:17 a.m. local time. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, lost 26.22, or 0.9 percent, to 2,877.90 yesterday. The CSI 300 Index declined 1.1 percent to 3,215.45.
The Shanghai Composite, the worst performer among major Asian benchmarks this year, has fallen 8.9 percent since reaching an almost seven-month high on Nov. 8, on concern that monetary tightening will curb economic growth. The gauge has lost 12 percent this year.
China won’t raise borrowing costs this month, delaying an adjustment to next year because of concerns over the negative effects on state-owned enterprises and banks, according to Shen Jianguang, chief economist for greater China at Mizuho.
The uncertain global environment and policy makers’ concern that an increase could boost hot money inflows also contributed to the delay, Shen said in an e-mailed report after the market close yesterday. He previously forecast the central bank would raise rates this month.
Bank Profits
China’s higher risk-weighting requirements on loans to local governments may cut pretax profits of the banking industry by 13.1 percent, Deutsche Bank AG said in a report.
Agricultural Bank of China Ltd. is likely to be most affected by the rule, which may lower the lender’s pretax profit by 46.2 percent, followed by China Minsheng Banking Corp. with a 14.9 percent reduction, analysts Tracy Yu and Judy Zhang wrote in the report dated yesterday. “The risk or uncertainty to us is not capital, but the new provisioning requirements” on local government finance vehicles, they wrote.
The People’s Bank of China has held off adding to October’s first rate increase since 2007, instead ratcheting up banks’ reserve requirements and using administrative tools such as the sale of food reserves to tackle inflation running at a two-year high. Chinese officials have said U.S. monetary easing may spur capital inflows, adding to price pressure.
The central bank may raise rates in January or February, Shen said, adding that policy tightening is likely to be “milder than expected” as policy makers may have underestimated inflationary pressure. The main risk for the Chinese economy next year is that higher-than-estimated price gains may result in a “more abrupt monetary tightening,” he said.
China Inflation
Inflation in China accelerated to 5.1 percent last month from a year earlier, the biggest jump in 28 months, driven by higher food costs.
Crude oil rose to the highest level in more than two years after government reports showed that U.S. supplies dropped and the country’s economy grew more than previously estimated in the third quarter. The February futures contract rose 0.7 percent to $90.48 a barrel in New York, the highest settlement since Oct. 3, 2008. Copper futures gained as much as 0.2 percent to $9,365 a metric ton in London, and traded at $9,360 by 9:05 a.m. Singapore time.
China CNR, maker of the nation’s fastest rail-cars, signed contracts with various customers, including a contract with Hamersley Iron Pty to build ore carts, according to a statement filed to the Shanghai stock exchange.
