China Stocks Gain, Paring Weekly Decline; Drugmakers Climb, Shenhua Falls

China’s stocks rose, paring a weekly loss, as health-care companies and producers of consumer staples gained as investors sought companies more resilient to an economic slowdown. Coal producers and developers declined.

China National Medicines Corp. advanced 3.9 percent after the Shanghai Securities News said China may announce a plan to boost the pharmaceutical industry. Heilongjiang Agriculture Co. climbed the most in three weeks as Xinhua News Agency said the country plans to increase grain-output capacity. China Shenhua Energy Co., the nation’s largest coal producer, dropped to a two-week low on concern demand for energy will slow.

“Only defensive stocks seem safe,” said Wang Zheng, chief investment officer at Jingxi Investment Management Co. in Shanghai. “Forthcoming economic data will be uglier and we face the pressure of slowing growth.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 7.26, or 0.3 percent, to 2,610.74 at the 3 p.m. close after swinging between gains and losses. The gauge dropped 1.2 percent this week on signs the global recovery is faltering. The CSI 300 Index added 0.3 percent to 2,858.57.

The Shanghai gauge has rebounded 10 percent from this year’s low on July 5 as investors speculated the government would ease monetary policy. That’s pared this year’s loss to 20 percent, after the government increased down-payment requirements on home sales and ordered banks to set aside more deposits as reserves.

Health Boost

China National Medicines, a pharmaceutical retailer, added 3.9 percent to 24.54 yuan, the most since Aug. 5. Shanghai Pharmaceuticals Holding Co. rose 2.6 percent to 19.53 yuan. Tibet Rhodiola Pharmaceutical Holding Co. gained 4.6 percent to 14 yuan.

The government wants to develop one or two companies with sales exceeding 100 billion yuan ($14.7 billion) and 20 companies with more than 10 billion yuan in revenue, the Shanghai Securities News reported today, citing Xiang Xin, head of market supervision at the ministry. The plan may be announced as early as next month, according to the report.

An index tracking health-care companies gained 1.1 percent, the most among the 10 industry groups on the CSI 300. Consumer staples gained 0.8 percent, the second-biggest advance.

Heilongjiang Agriculture, a unit of China’s biggest crop grower, climbed 2.4 percent to 13.62 yuan, the most since Aug. 9. Xinjiang Guannong Fruit & Antler (Group) Co. advanced 5 percent to 21.52 yuan. Dalian Yi Qiao Marine Seeds Co. surged 8.6 percent to 80.38 yuan, the highest since the stock began trading on July 13.

Grain Target

China must increase its annual grain harvest to at least 540 million tons by 2020 to keep to its target of a food self- sufficiency rate of 95 percent, the Xinhua News Agency reported. Inflation accelerated to 3.3 percent in July, the fastest pace in 21 months, as flooding drove up food prices.

China’s economy is cooling as the government trims credit growth from last year’s record $1.4 trillion and discourages multiple-home purchases to cool surging property prices. July industrial output rose the least in 11 months, retail sales growth eased and new loans climbed less than estimated.

Shenhua dropped 0.8 percent to 23.72 yuan, the lowest since Aug. 13. China Coal Energy Co., the nation’s second-largest coal producer, fell 0.5 percent to 9.72 yuan. Datong Coal Industry Co., the third largest, retreated 0.5 percent to 16.33 yuan.

Crude oil prices have dropped 0.5 percent this week and 7.9 percent since the start of the year on concern global growth is faltering. Second-quarter U.S. gross domestic product growth may be revised down to 1.4 percent from 2.4 percent earlier, according to a Bloomberg News survey of economists.

Property Curbs

Developers retreated on prospects the government will increase property curbs.

China Vanke Co., the nation’s biggest listed property company, dropped 1.1 percent to 8.44 yuan. Poly Real Estate Group Co., the second largest, lost 0.6 percent to 12.07 yuan.

Zhang Ping, head of China’s top economic planning agency, said the nation will further implement property measures to control the real estate market and curb speculation, the China News Service reported yesterday, citing a speech Zhang delivered to the National People’s Congress.

Some real estate prices are still high, Zhang, head of the National Development and Reform Commission, was cited as saying.

A “sharp pickup” in China’s property prices is a “key risk” to the country’s economic growth, David Wyss, chief economist at Standard & Poor’s, said in Hong Kong today.

The country’s loan target won’t be relaxed this year and will be maintained at 7.5 trillion yuan, the China Business News reported yesterday, citing the central bank adviser Xia Bin. The country’s loan target in 2011 won’t be lower than this year’s level, said the newspaper citing Xia.

“Those who hope that the government will relax tightening policies will be disappointed as property prices are still at a high-flying level,” said Zhang Kun, a strategist at Guotain Junan Securities Co. in Shanghai.

--Zhang Shidong. Editors: Richard Frost, Linus Chua

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-7014 or szhang5@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.