Chinese banks advanced a record 803.6 billion yuan of new loans in January, the equivalent to almost two-thirds of the quota the central bank allotted for the first quarter.

Credit Suisse Group today lifted its rating on Merchants Bank to "outperform," saying the bank will continue to enjoy the strongest income growth among peers. Macquarie Group Ltd started coverage of the stock with an "outperform" rating.

Shenzhen-based Merchants Bank posted a 110 percent increase in net income in 2007 on higher loan growth and fee income. Macquarie forecast the bank's profit would grow 42 percent this year.

China Merchants jumped 4.87 percent, or 1.48 yuan, to 31.84 yuan. The stock dropped to an almost seven-month low in the past few trading days on concern a two-year share lock-up will spark a sell-off by institutional investors.

Shanghai Automotive Industry Corp, CNOOC Investment Co and 75 other institutional investors were today allowed to sell 2.53 billion yuan-denominated shares, representing 17 percent of total outstanding shares of the bank.

Industrial & Commercial Bank of China, the nation's biggest lender, gained 2.03 percent, or 0.13 yuan, to 6.54 yuan. Beijing-based ICBC remains "the safest bet for exposure to the sector," and in the near term, Construction Bank is also a trade opportunity, JPMorgan said.

Elsewhere, China Eastern Airlines Corp, the nation's third-largest carrier, gained 2.69 percent, or 0.39 yuan, to 14.89 yuan. Its board rejected an offer from the parent of Air China Ltd and would instead continue pursuing a tie-up with Singapore Airlines Ltd, according to a statement to the Hong Kong stock exchange. Air China gained 3.34 percent, or 0.61 yuan, to 18.90 yuan.

Guangdong Midea Electric Appliances Co may pay 1.68 billion yuan in cash for 24 percent of Wuxi Little Swan Co, a washing machine manufacturer, the Shanghai Securities News reported today, citing people it didn't identify. Midea Electric rose 1.8 percent, or 0.84 yuan, to 46.69 yuan on February 15 when its shares were last traded before it was suspended.

(Shanghai Daily, February 27, 2008)