China’s Stocks Rise as Greek Poll Overshadows Home Price Slump
China’s stocks rose for a second day, extending last week’s advance for the benchmark index, as easing concern that Greece will exit the euro overshadowed slumping Chinese property prices.
BYD Co., the automaker backed by investor Warren Buffett, advanced 1.9 percent after the Economic Information Daily reported China will exempt new energy vehicles from a sales tax. Jiangxi Copper Co. and coal producer China Shenhua Energy Co. led gains for commodity producers after projections showed Greek politicians that support a bailout won enough seats to control parliament, bolstering the global economic outlook.
“The risk of Greece being removed from the euro has fallen considerably and investors think this is positive for emerging markets like China,” said Tang Yonggang, an analyst at Hongyuan Securities Co. in Beijing.
The Shanghai Composite Index (SHCOMP) climbed 9.2 points, or 0.4 percent, to 2,316.05 at the close. The CSI 300 Index (SHSZ300) added 0.5 percent to 2,581.21. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, advanced 1.6 percent at the June 15 close in New York.
Concerns that a growth slowdown is deepening and Greece will leave the euro area have pushed the Shanghai index down 5.9 percent from this year’s high set on March 2. Stocks in the measure are valued at 10.1 times estimated earnings, compared with the five-year average of 17.8, Bloomberg weekly data showed.
Energy and material stock gauges in the CSI 300 rose 0.8 percent and 0.6 percent respectively. PetroChina Co., the biggest energy producer, climbed 0.3 percent to 9.24 yuan after Nomura Holdings Inc. upgraded the Hong Kong-listed shares to neutral from reduce. Shenhua Energy, the largest coal producer, added 1.1 percent to 24.06 yuan.
Jiangxi Copper, China’s largest producer of the metal, gained 0.9 percent to 25.19 yuan. Tongling Nonferrous Metals Group Co., the second-largest, added 0.3 percent to 21.27 yuan. The metal rose as much as 1.4 percent to $7,615 a metric ton, the highest price since May 30, on the London Metal Exchange and traded at $7,558.25 by 3:15 p.m. in Singapore.
The New Democracy and Pasok parties took 162 seats in the 300-member parliament, according to the official projection by the Interior Ministry in Athens based on 95 percent of the votes. The results eased concern that Alex Tsipras’s Syriza party would take control of the Greek government and reject austerity measures needed to qualify for international aid.
Europe is China’s biggest export market, making up about 18 percent of the nation’s overseas sales, according to Shenyin & Wanguo Securities Co.
Auto Tax Exemption
China will exempt new energy vehicles and plug-in hybrid models from a sales tax under a development plan that will be announced by the State Council in the near term, the Economic Information Daily reported today, citing information from an energy vehicle conference.
BYD, which started selling its e6 electric car to individuals last October, gained 1.9 percent to 23.57 yuan.
Policy makers in the world’s second-biggest economy are shoring up expansion as Europe’s deepening debt crisis curtails exports and foreign investment, and property curbs at home damp demand.
China’s economy will bottom out this quarter and rebound in the following three months as government measures to stabilize a slowdown take effect, Chen Yulu, an academic adviser to the nation’s central bank, said in an interview at a forum in Beijing on June 16. Full-year growth “should be able to hold up above 8 percent,” he said.
Falling Home Prices
The nation’s home prices fell in a record 54 of 70 cities tracked by the government in May as developers cut prices to boost sales amid housing curbs.
The eastern city of Wenzhou led declines with a 14 percent slump in values from a year earlier, while Beijing and Shanghai recorded losses of as much as 1.6 percent, according to data released by the statistics bureau today.
Slumping property prices boosted speculation local governments may seek to loosen real-estate curbs that are dragging down the economy.
“With further housing market corrections and sluggish land sales, local governments have the incentive to introduce various measures to circumvent the property tightening measures,” JPMorgan Chase & Co. said in a report today.
China Vanke Co., the nation’s biggest developer, rose 0.9 percent to 9.19 yuan, while rival Poly Real Estate Group Co. added 1.7 percent to 11.99 yuan.
Inner Mongolia Yili Industrial Group retreated 4.7 percent to 20.82 yuan, headed for the lowest close since Feb. 1. The company apologized for a recall of baby formula found with “abnormal” levels of mercury, according to a statement from the company to the Shanghai Stock Exchange.
The iShares FTSE China 25 Index Fund (FXI), the biggest U.S.- listed China exchange-traded fund, jumped 2.1 percent on June 15 to a one-month high, completing its third weekly advance.
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