Well, how about that. The week was filled with little but good news for Anhui Conch Cement (600585.SH). December’s figures regarding loan growth (up 19%) seem a bit quaint in comparison to the record-smashing US$175 billion in new loans banks gave out in January. The best part, for us at least, is that the loans all seem to be targeted at infrastructure projects – and what’s good for infrastructure in general is good for Anhui Conch. Or so the theory goes.
An encouraging sign is that anecdotal evidence suggests the numbers aren’t empty. I spoke last night with an executive at a European multinational involved in infrastructure projects – he confirmed that times are looking good for infrastructure-related companies.
The good news helped to push Anhui Conch up nearly 9.4% this week. Of course, this was in a week when the SCI rose nearly 9.6%. Maybe investors decided to put the money they saved on fireworks last week into something slightly (although only very slightly) less volatile.
There’s something hollow about Anhui Conch’s success, however. It’s hard to shake the feeling that the rises are due to mistakenly high expectations of how much these new loans are going to help. The story of weak private sector investment hasn’t gone anywhere – investors just seem to be ignoring it for the time being.
Industrial and Commercial Bank of China (ICBC, 601398.SH) also rose, but by a mere 5.95% over the week. We’re down a bit more than 34% since June 3, while the SCI has closed the gap and is down a bit more than 36%.