China Stocks Advance for First Time in Three Days After U.S. Factory Data

China’s stocks rose for the first time in three days, led by automakers and commodity producers, after vehicle sales surged and U.S. manufacturing grew faster than estimated.

SAIC Motor Corp., the nation’s biggest carmaker, jumped the most in more than a year. Jiangxi Copper Co. and China Shenhua Energy Co. advanced as metal and oil prices climbed. Offshore Oil Engineering Co. gained 3.2 percent after the Shanghai Securities News said China may invest in offshore drilling equipment. Ping An Insurance (Group) Co. rallied 3.9 percent as a two-month trading suspension was lifted after the insurer said it will take control of Shenzhen Development Bank Co.

“We won’t see a big slump in economic growth,” said Wei Wei, an analyst at West China Securities Co. “The alliance between Ping An and Shenzhen Bank will enable them to take more market share.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, climbed 32.89, or 1.3 percent, to close at 2,655.78, the highest in two weeks. The CSI 300 Index rose 1.3 percent to 2,921.39.

The Shanghai gauge has rebounded 12 percent from this year’s low on July 5 as investors speculated the government would ease monetary policy to spur growth. That’s trimmed this year’s loss to 19 percent, after the government increased down- payment requirements on home sales and ordered banks to set aside more deposits as reserves to curb asset bubbles.

The Standard & Poor’s 500 Index rallied 3 percent yesterday, the most since July 7, after the Institute for Supply Management’s factory index unexpectedly rose to 56.3 in August from 55.5 in July. The median estimate of 78 economists surveyed by Bloomberg News forecast the measure would fall to 52.8. Readings above 50 signal growth.

Auto Sales

Data yesterday also showed China’s factory output grew at a faster pace in August after the weakest performance since early 2009 a month earlier.

SAIC Motor climbed 8.9 percent to 17.50 yuan, the biggest gain since May last year. FAW Car Co., which makes passenger cars with Volkswagen AG, advanced the 10 percent daily limit to 18.36 yuan. Chongqing Changan Automobile Co., the Chinese partner of Ford Motor Co. and Mazda Motor Corp., jumped 6.4 percent to 10.98 yuan.

China’s passenger-car sales grew 59 percent in August, more than three times July’s pace, as higher incentives by dealers offset government measures to cool the economy, the China Automotive Technology & Research Center said yesterday shortly before yesterday’s 3 p.m. close of trade.

‘Buy’ Rating

Passenger-car sales in the world’s largest auto market will maintain a “good performance” in September, the center said on its website. Auto sales exceeded market expectations, GF Securities Co. said in a report dated yesterday. The brokerage maintained its “buy” recommendation for the industry.

Jiangxi Copper, China’s biggest producer of the metal, added 0.9 percent to 31.54 yuan. Western Mining Co., a mineral exploration company, climbed 3.3 percent to 11.33 yuan. Shenhua, the nation’s largest coal producer, rose 0.5 percent to 23.85 yuan.

Crude oil for October delivery gained 2.8 percent yesterday in New York, its biggest advance since Aug. 2. The London Metal Exchange Index of six metals including aluminum and copper climbed 2.3 percent yesterday.

Offshore Oil Engineering, a unit of China’s third-largest oil producer, added 3.2 percent to 7.16 yuan, the highest since April 26. China may invest 250 billion yuan ($36.7 billion) to 300 billion yuan in offshore drilling equipment to add production capacity for oil and natural gas, the Shanghai Securities News said, citing Jin Xiaojian, director of projects engineering for Cnooc Ltd. Phone calls to the company weren’t answered.

Ping An

Ping An, China’s second-biggest insurer, rose 3.9 percent to 48.61 yuan. The company will pay 29.1 billion yuan for a stake that will give it control of Shenzhen Development Bank Co. and bolster its banking operations.

The acquisition gives Ping An control of a publicly traded lender with 855 billion yuan of assets and a network of more than 300 outlets, advancing Chairman Peter Ma’s plan of building a financial conglomerate.

Shenzhen Bank rallied 3.9 percent to 18.19 yuan. The lender’s shares have been suspended since June 29 and Ping An’s since June 28. The Ping An deal is “strategically and financially sensible,” Citigroup Inc. said in a report.

Chongqing Brewery Co., the beermaker part-owned by Carlsberg A/S, rose 10 percent to 41.97 yuan, the biggest increase since March 26, after announcing its hepatitis B vaccine entered a clinic trial.

Property Curbs

China Vanke Co., the largest listed Chinese developer by market value, rose 1.2 percent to 8.57 yuan after the National Business Daily reported the company made more than 10 billion yuan in apartment sales last month. Deutsche Bank AG also said the company is also among its top picks in property.

Investors should seek property companies that can adapt to the government’s policies, Deutsche Bank analysts led by Tony Tsang wrote in a report today. China may strengthen existing measures targeting the nation’s real estate market, while speculation that the government will relax such policies has “vanished,” they wrote.

They favor developers that have greater exposure to so- called second- and third-tier cities that are “healthier” and to prime-location commercial buildings in the largest cities.

Investors should guard against possible declines in China’s smaller-company stocks due to excessive valuations and favor the nation’s larger companies such as banks, according to Haitong Securities Co. The CSI Smallcap 500 Index rebounded 1.8 percent today after falling 1.3 percent yesterday, the first decline in five days. The gauge is trading at its highest since April 28.

Citic Securities Co. yesterday said small-caps may reverse a 2-month long rally on concern prices exceed earnings prospects.

--Zhang Shidong. Editors: Richard Frost, Allen Wan

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

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