China’s Stocks Rise for Third Day, Led by PetroChina, Banks

China’s stocks rose for a third day, as PetroChina Co. and Industrial & Commercial Bank of China Ltd. rallied on speculation a growing economy will bolster earnings for the nation’s biggest banks and energy producers.

PetroChina led gains for oil producers after its majority shareholder reported a profit jump of 30 percent. ICBC, the world’s largest lender by market value, climbed to the highest in a month after the World Bank said China’s economy will grow 8.7 percent in 2011. PetroChina and ICBC contributed entirely to the Shanghai stock index’s gain. China Vanke Co. slid more than 1 percent on concern potential property taxes may hurt sales.

“China’s economists are even more optimistic than the World Bank about the nation’s economic growth,” said Wang Cheng, a strategist at Guotai Junan Securities Co. in Shanghai. “The growth, if not hammered by the government’s tightening policies, will help companies’ earnings.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, erased earlier declines, adding 6.4, or 0.2 percent to 2,827.71 at the 3 p.m. close. The CSI 300 Index slipped less than 0.1 percent to 3,141.28.

The Shanghai gauge has gained 0.7 percent this year as large banks and property companies rebounded on speculation the government will be able to sustain economic growth while taming inflation. The measure plunged 14 percent in 2010 as Premier Wen Jiabao’s government ordered banks to set aside more reserves six times and boosted rates twice to curb asset bubbles after record gains in lending and property prices. Consumer prices jumped 5.1 percent in November, the most in 28 months.

PetroChina Gains

PetroChina, the nation’s largest oil company, climbed 1.4 percent to 11.40 yuan. China Petroleum and Chemical Corp. jumped 2.2 percent to 8.54 yuan.

China National Petroleum Corp., the majority shareholder in PetroChina, earned 167.6 billion yuan ($25.4 billion) last year, President Jiang Jiemin said in a statement on CNPC’s website today, without specifying whether the income was before or after tax. Profit reached 128.6 billion yuan in 2009, its annual report shows.

ICBC increased 1.2 percent to 4.34 yuan, the highest close since Dec. 6. ICBC Chairman Jiang Jianqing said the bank has no plan to seek financing from the capital markets within three years, China Securities Journal reported. Agricultural Bank of China Ltd., the third biggest, rose 0.8 percent to 2.68 yuan.

The nation’s growth will ease “due in part to the unwinding of fiscal stimulus, restrictions placed on overheating sectors,” such as housing, and tighter monetary policy to help reduce price increases, the World Bank said in a report released today. The lender forecast China’s economy to grow 8.4 in 2012.

Inflation Outlook

The economy grew 10.1 percent last year, according to the median estimate of 18 economists in a Bloomberg survey. The expansion may slow to 9 percent this year, still three times the rate of the U.S. and six times the speed of the euro zone, Bloomberg surveys show.

China has considerable scope to increase interest rates further, Vikram Nehru, the World Bank’s chief economist for East Asia and Pacific, told a briefing in Beijing today.

Consumer prices may have increased as much as 3.5 percent in 2010, the People’s Daily reported today, citing the National Bureau of Statistics chief economist Yao Jingyuan. The government’s inflation target for last year was 3 percent.

China Vanke, the nation’s biggest developer, dropped 1.4 percent to 8.94 yuan. Poly Real Estate Group Co. lost 1.7 percent to 14.86 yuan. Gemdale fell 1.7 percent to 7.36 yuan.

Shanghai may impose a property tax of 0.5 to 0.6 percent on buyers of new homes exceeding 70 square meters of area per person, China Securities Journal reported, citing an unidentified official at the National Development and Reform Commission’s Shanghai branch.

Shippers Gain

Home prices in the nation’s 70 cities rose for an 18th month in November, according to the statistics bureau, after measures including limiting the number of house purchases and suspensions of mortgage loans for third homes failed to curb price gains.

COSCO Shipping Co., a unit of China’s biggest shipping company, advanced 0.9 percent to 7.93 yuan. The shares resumed trading today after being suspended since Jan. 4. The company said Jan. 7 that 2010 net income more than doubled to 349 million yuan from 136 million yuan in 2009. It said today 96.67 percent of a rights offer was subscribed.

COSCO Shipping’s profit slightly exceeded the market consensus,” according to Shenyin Wanguo Securities Co. analysts Zhou Meng and Zhang Xilin. The right offer will help the company’s fleet upgrading, the analysts said in a report today.

China Cosco Holdings Co. rose 0.5 percent to 9.88 yuan. Asia’s largest shipping line by market value was upgraded to “buy” at Citigroup Inc. yesterday on potential asset purchases and the outlook for container rates.

Airlines Rise

China Southern Airlines Co., the nation’s largest carrier, rose 2.9 percent to 9.74 yuan. China Eastern Airlines Corp. gained 1.2 percent to 6.76. The nation’s carriers aim for passenger traffic of 300 million this year, up 13 percent from 2010, the Civil Aviation Administration of China said.

Sinovel Wind Group Co., China’s biggest maker of wind turbines, dropped 9.7 percent from its offer price to 83.64 yuan. The company raised 9.5 billion yuan ($1.43 billion) in China’s biggest initial public offering this year, according to data compiled by Bloomberg. It priced its shares at 90 yuan.

“The 90 yuan offer price is too high, given the company’s growth will slow to about 25 percent from almost 100 percent over the past few years,” said Tao Zhengao, an analyst at Donghai Securities Co. in Shanghai. “On the whole, the wind power equipment industry faces some uncertainty such as fierce competition and difficulty in getting power generated from wind into grids for sale.”

--Irene Shen. Editors: Allen Wan

To contact Bloomberg News staff for this story: Irene Shen in Shanghai at +86-21-6104-3049 or ishen4@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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