China's Stock Index Gains Most in 3 Weeks

China's stock benchmark recorded its biggest gain in three weeks as investors judged recent declines had made shares attractive relative to earnings prospects., Bloomberg 2/27/2008 7:56:14 AM

China Minsheng Banking Corp. and China Merchants Bank Co. gained after JPMorgan Chase & Co. and Credit Suisse Group recommended the Hong Kong-traded shares of mainland banks.

The CSI 300 Index, which tracks yuan-denominated stocks traded on the Shanghai and Shenzhen exchanges, added 124.23, or 2.8 percent, to 4,639.77, with all but 12 of its 300 constituents gaining today.

The measure lost 10 percent over five days through yesterday, the longest losing streak since Aug. 7, 2006. Stocks on the CSI 300 are now valued at 26 times estimated profit compared to 46 times on Oct. 16, when the gauge closed at a record high.

Minsheng Banking, the nation's first privately owned bank, added 0.65 yuan, or 5 percent, to 13.63. China Merchants, the country's fourth-biggest bank by market value, gained 1.48 yuan, or 4.9 percent, to 31.84.

JPMorgan recommended buying Chinese bank stocks because revenue momentum at these companies remain strong, according to a report released today. The brokerage raised its rating on China Merchants to ``outperform'' from ``neutral.''