China Stocks Rise From Five-Week Low; Consumer Companies Gain, Miners Drop

China’s stocks rose as appliance makers gained on the prospect of consumer spending during the upcoming holidays, overshadowing declines by commodity producers amid speculation the government will impose a property levy.

GD Midea Holding Co. and Gree Electric Appliances Inc, the nation’s top appliances makers, climbed more than 2 percent. Jiangxi Copper Co. slumped 4 percent after China Business News said the government may announce property tax measures soon to cool the housing market. Air China Ltd. paced losses by airlines amid concern recent gains were excessive.

“Consumer stocks usually outperform the broader market towards holidays and it’s no exception this time,” said Wu Kan, Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “The property tax is like a sword hanging over the market and will continue to weigh on stocks until the government is upfront about any plans.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, added 2.84, or 0.1 percent, to 2,591.55 at the 3 p.m. close. It yesterday dropped to the lowest since Aug. 12. The CSI 300 Index rose 0.3 percent at 2,857.48.

China’s markets are closed for the rest of the week from tomorrow for the Mid-Autumn Festival and from Oct. 1 to Oct. 7 for National Day holidays.

The Shanghai index has lost 21 percent this year, the world’s second-worst performer, as the government imposed tightening measures ranging from restrictions on multi-house purchases to a 7.5 trillion yuan ($1.1 trillion) annual limit on new lending by banks. The gauge has climbed 9.6 percent from this year’s low on July 5 on signs the nation’s economic slowdown is stabilizing.

Consumer Stocks

An index tracking consumer discretionary stocks rose 1.2 percent, the most on the CSI 300, followed by a 1 percent gain by health-care companies.

Midea, China’s second-biggest publicly traded appliance maker, advanced 2 percent to 14.99 yuan. Gree Electric, China’s largest maker of home air-conditioners, added 2 percent to 14.15 yuan. Suning Appliance Co., the nation’s biggest home appliance retailer by market value, climbed 3.1 percent to 15.49 yuan.

SAIC Motor Corp., the nation’s largest carmaker, advanced 2.7 percent to 17.40 yuan, the biggest gain since Sept. 2. The company said it may invest in General Motors’s IPO if conditions are favorable.

Citic Securities Co. remains “overweight” on China’s air- conditioning industry after sales jumped 81 percent in August from a year ago, analysts Hu Yali and Liao Xinyu said in a report today.

Drugmakers Gain

China needs to increase domestic consumption to help survive in a global economic environment that is growing more challenging, Li Daokui, an adviser to the People’s Bank of China, said Sept. 19.

China National Medicines Corp., a pharmaceutical distributor, rallied 4.4 percent to 24.46 yuan, the most since Aug. 5. Shanghai Pharmaceuticals Holding Co. gained 1.2 percent to 21.49 yuan.

Jiangxi Copper, China’s biggest producer of the metal, slid 4 percent to 29.49 yuan, the most since Aug. 20. The company said last week 1.28 billion of its shares will become tradable on Sept. 27.

Aluminum Corp. of China Ltd., better known as Chalco, dropped 0.5 percent to 9.62 yuan, its lowest close in two months. Henan Yuguang Gold & Lead Co., China’s biggest lead producer, retreated 4.4 percent to 18.34 yuan.

The property tax, which will be extended to include residential property, is likely to be implemented at the start of next year, China Business News said, citing an unidentified person. The government currently imposes a tariff on business- use real estate and exempts individuals’ residential housing.

House Prices

Real-estate developers should price homes “reasonably” or face tougher tightening measures, China Securities Journal reported today, citing Zhu Zhongyi, vice chairman of the China Real Estate Association.

Property prices in urban China are “too high” and “difficult to accept,” according to a third-quarter survey of urban households by the People’s Bank of China released Sept. 19.

Air China, the nation’s largest international carrier, dropped 1.4 percent to 12.23 yuan. The stock rallied 10 percent this month through yesterday on the prospect the strengthening yuan will ease dollar-denominated fuel bills.

China Southern Airlines Co., the nation’s biggest carrier by fleet size, slid 0.8 percent to 8.28 yuan, dropping from its highest close since May 5. China Eastern Airlines Corp., the nation’s second-largest carrier, fell 2.5 percent to 7.88 yuan.

The yuan climbed 0.18 percent to 6.7025 per dollar, according to the China Foreign Exchange Trade System. That’s the strongest level since the central bank unified official and market exchange rates at the end of 1993.

--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

To contact the editor responsible for this story: Linus Chua at lchua@bloomberg.net

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