Ping An Insurance (Group) Co. of China Ltd. , China Resource Land Ltd. and Esprit Holdings Ltd. , which have between them lost 35 to 60 percent of market capitalization in the third quarter, led percentage gains among Hang Seng Index components.
“At this point, we are trading on low volume with people just waiting and seeing, and China GDP tomorrow. We could very well see a fresh selloff if there’s no resolution in Europe by this weekend,” said Jackson Wong, vice-president of equity sales at Tanrich Securities.
The Hang Seng Index was up 1.54 percent at 18,786.37 by the midday trading break. The China Enterprises Index gained 2.57 percent as turnover neared lows in the last month.
Near-term resistance on the Hang Seng Index is next seen at the May 2010 low of about 18,971 and the 38.2 percent Fibonacci retracement of the benchmark rise from its 2008 low to the cyclical peak in 2010, at about 19,557.
Ping An jumped 7 percent after reporting monthly premium data for September that according to Barclays Capital analysts continued to outpace peers in both life and non-life insurance.
The H-share listing of one of China’s largest insurers has almost recovered all of its losses from late September. A confluence of fears on the Chinese economy in the third quarter has hammered it down more than 30 percent in 2011 to date.
Ping An is now trading at 13.3 times forward 12-month earnings compared with a 10-year median of 24 times, according to Thomson Reuters Starmine data. Its price-to-book ratio stands at 2.2 times, compared with a 10-year median of 3.5.
Both make Ping An more expensive than bigger rival China Life Insurance Co. Ltd. , which is trading at 13 times its forward 12-month earnings and 1.9 times its forward 12-month book value, but Ping An remains Barclays’ top pick in the mainland insurers space.
Ping An was also among leading boosts on the Shanghai Composite Index , gaining 1.5 percent to help the Shanghai benchmark inch up 0.2 percent to 2,435.7 points at the midday break.
Financials were among the bigger gainers on the day so far, with mid-sized banks China Merchants Bank Co. Ltd. and China Minsheng Banking Corp. joining Ping An as the top boosts on the Shanghai benchmark.
Coal counters, battered last week in the aftermath of a resource tax widening to include coking coal and rare earths from Nov. 1 , also saw strong gains. China Shenhua Energy Co. Ltd. gained 2.4 percent.
Turnover on the Shanghai bourse was lacklustre ahead of GDP data expected on Tuesday. A Tsinghua University report on Monday suggested the world’s second-largest economy may have grown by 9.3 percent in third quarter, figures that would assure investors that the economy remains resilient.
Fears of a hard landing for the domestic economy have hit mainland property and financial stocks hardest, sparking capitulation in on- and offshore China markets in the last quarter, with the Shanghai Composite down 15 percent and the China Enterprises Index slumping 30 percent.
In a note on Monday, CICC said such capitulation in the markets coincided with a collapse in valuations only four other times in the last 16 years, a rare occurrence that lays the foundation for a counter-trend rally at the minimum or for a final market bottom.
