[R]6:00PM New York, 6:00AM Hong Kong – Stocks in Hong Kong and Shanghai surged after banks reported better than expected earnings. China Merchants, China Citic, Bank of China and BoCom earnings surprised investors. Sinopec reported net income surged 85%.[/R]

The Hang Seng index surged 2.8% or 401.84 to close at 14,956.95 and recovered from a loss of nearly 5% in the last two sessions. Earnings from banks and airlines recovered after the flu scare, lifted broader markets.

The Shanghai composite Index surged 2.8% to 66.75 to 2,468.19 on higher than expected profits from banks. Bank of Communications Ltd surged 9% to 6.81 yuan after it reported first quarter profit of 7.94 billion yuan matching the earnings in the quarter a year ago.

Bank of Ningbo Co. increased 4.7% to 9.6 yuan after first quarter earnings increased 4.8% and Pudong Bank surged 9.6% to 23 yuan.

Bank of China Ltd increased 2.5% to HK$2.83 after it reported first quarter net income declined 14% to 18.6 billion yuan, beating the expectations.

China Citic Bank Corp gained 5.4% to HK$3.52 after it reported net income of 13.32 billion yuan.

China Merchants rose 4.8% to 15.9 yuan after it reported net interest income declined 20% and net income fell 33%.

Sinopec rose 3.6% to HK$5.80 after first quarter profit surged 85% to 11.2 billion yuan and the company indicated that net income is expected to increase in the first half of more than 50%.

China Invests in Taiwan Company

The thawing of relations between China and Taiwan was marked with China Mobile making 14% investment in Taiwan based Far EsasTone Telecommunication Co for NT$40 a share.

The deal is the first investment made by China government controlled company in Taiwan since the civil war in 1949.

Earnings Review

Aluminum Corporation of China Limited, the nation’s biggest producer of the metal reported first quarter revenues fell 24% to Rmb 13.94 billion from Rmb 18.44 billion a year ago. Net loss in the quarter was Rmb 1.9 billion or Rmb 0.1397 per diluted share compared to net profit of Rmb 1.25 billion or $0.0926 per share a year ago

Aluminum Corporation of China Limited, in the last one year traded as high as Rmb 23.85 in May 2008 and as low as Rmb 5.90 in October 2008. Based on the yesterday’s closing price of Rmb 10.26 the company has market cap of Rmb 138.76 billion.

China Petroleum & Chemical Corporation, Asia’s biggest refiner reported first quarter revenues fell 2.6% to Rmb 228.59 billion from Rmb 332.01 billion a year ago. Net profit in the quarter rose 85% to Rmb 11.22 billion or Rmb 0.129 per diluted share compared to net profit of Rmb 6.06 billion or $0.043 per share a year ago.

China Petroleum & Chemical Corporation, in the last one year traded as high as Rmb 13.99 in June 2008 and as low as Rmb 6.56 in November 2008. Based on the yesterday’s closing price of Rmb 9.71 the company has market cap of Rmb 841.88 billion.

China Merchants Bank Co., Ltd, the nation’s fifth-largest lender by market value reported first quarter net interest income fell 20.2% to Rmb 9.5 billion from Rmb 11.9 billion a year ago. Net profit in the quarter fell 33% to Rmb 4.21 billion or Rmb 0.29 per diluted share compared to net profit of Rmb 6.32 billion or $0.43 per share a year ago.

China Merchants Bank Co., Ltd, in the last one year traded as high as Rmb 35.47 in May 2008 and as low as Rmb 10.68 in October 2008. Based on the yesterday’s closing price of Rmb 15.92 the company has market cap of Rmb 234.14 billion.

Chongqing Changan Automobile Company Limited, China’s second-biggest maker of minivans reported first quarter sales rose 22.5% to Rmb 4.9 billion from Rmb 4 billion a year ago. Net profit in the quarter fell 89% to Rmb 28.3 million compared to net profit of Rmb 268 million a year ago.

Chongqing Changan Automobile Company Limited, in the last one year traded as high as Rmb 4.42 in May 2008 and as low as Rmb 1.60 in October 2008. Based on the yesterday’s closing price of Rmb 2.93 the company has market cap of Rmb 6.84 billion.

Cosco Pacific Limited, the Asia’s third- largest container-terminal operator reported first quarter revenues rose 2.6% to $75.44 million from $75.36 million a year ago. Net profit in the quarter fell 34% to $43.4 million or $1.93 per diluted share compared to net profit of $65.8 million or $2.93 per share a year ago.