Nov. 9 (Bloomberg) -- China’s stocks rose for a seventh day, sending the Shanghai Composite Index to its longest winning streak in two months. Datang International Power Generation Co. gained on speculation the nation will raise electricity prices.

Datang jumped 6.2 percent after CLSA Asia-Pacific Markets predicted China may raise retail electricity prices. FAW Car Co. climbed after China Daily said passenger-vehicle sales increased 79.6 percent in October. Poly Real Estate Group Co. fell 0.9 percent after the government said regulators may impose measures to reduce the use of debt for real-estate sales.

“We’re still positive on China and prefer the domestic consumption theme because exports are still in limbo,” said Roger Groebli, Singapore-based head of financial market analysis at LGT Capital Management, which oversees about $75 billion in assets. “There’s always a certain degree of policy risk when investing in China, but the government has so far been quite successful in avoiding disappointment to investors.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, added 11.55, or 0.4 percent, to 3,175.59 at the close, rounding off a seven-day, 7.3 percent rally. The advance is the longest since a similar stretch of gains ended Sept. 9. The CSI 300 Index climbed 0.4 percent to 3,495.79.

The Shanghai Composite is likely to extend its rally before testing a key resistance level, according to DMG & Partners Securities Pte. The next test will be 3,406, the 161.8 percent Fibonacci extension of an earlier wave of gains, he added.

‘Further Upside’

“We believe that there remains further upside,” DMG analyst James Lim said. “With the 14-day RSI still below overbought levels, we thus recommend investors to stay invested and hold on to their respective portfolios to leverage on this uptrend.”

The RSI, or relative strength index, a moving average based on how rapidly prices rose or fell, stood at 64.34 today, below the 70-level that indicates to some analysts that prices may retreat.

Datang International jumped 6.2 percent to 9.79 yuan, its largest gain in a month. Huaneng Power International Inc. rose 2.6 percent to 8.35 yuan, its highest close since Aug. 13. China Yangtze Power Co. advanced 2.1 percent to 13.75 yuan.

CLSA said on Nov. 6 that China, the world’s second-biggest energy user, may raise retail electricity prices by 5 percent this month to help power distributors cover losses.

FAW Car, the Chinese partner of Mazda Motor Corp., added 2.5 percent to 21.97 yuan. SAIC Motor Corp. climbed 0.7 percent to 24.92 yuan, its third straight day of gains.

Auto Sales

Sales of passenger vehicles in China rose 79.6 percent to 923,154 units in October from a year earlier boosted by government stimulus measures, China Daily reported, citing Rao Da, secretary-general of China Passenger Car Association. In the first 10 months, sales climbed to 8.08 million units and sales could reach 13.5 million by the end of 2009, the report said, citing Rao.

After the close of trading, the China Association of Automobile Manufacturers said passenger-car sales rose 76 percent last month to 946,400.

China International Travel Service Corp. climbed by the 10 percent daily limit to 18.93 yuan after the China Securities Journal said the government may soon approve a plan to make the southern province of Hainan an international tourism destination.

Tourism Stocks

The government’s proposal to develop tourism in Hainan island may increase demand for travel to the island and boost China International Travel’s earnings, said China Jianyin Investment Securities Co. analyst Zeng Guang.

Beijing Capital Tourism Co. gained 4.3 percent to 19.70 yuan, the highest close since Sept. 21. China United Travel Co. added 1.3 percent to 5.51 yuan. Hainan Zhenghe Industrial Group Co., a developer based in the Hainan province, rallied by the daily limit of 10 percent for a second day to 7.57 yuan.

A measure of property stocks on the Shanghai Composite slipped 0.7 percent, the only decline among five industry groups. Poly, the second-largest listed developer by market value, fell 0.9 percent to 26.26 yuan, while Gemdale Corp. retreated 1.2 percent to 16 yuan.

Fang Xinghai, the director-general of Shanghai’s financial services office, said at a forum today that the central bank and banking regulators may reduce “leverage ratios.” The banking regulator plans to review debt levels at some real-estate developers on concern the companies’ borrowings are fueling excessive gains in property prices, a person familiar with the matter had said previously.

CEC CoreCast Corp. fell 4.3 percent to 8.08 yuan, the second-biggest slump on the Shanghai Composite. The company said in a statement to the stock exchange dated Nov. 6 that it didn’t have any information that needs to be disclosed after its shares rose more than 20 percent in the past three trading sessions.

--Shiyin Chen. Editors: Linus Chua, John Liu

To contact Bloomberg News staff for this story: Shiyin Chen in Singapore at +65-6212-1170 or schen37@bloomberg.net.

Last Updated: November 9, 2009 03:00 EST