Chinese Stocks Advance Most in 2 Weeks on Insurers, Autos

Chinese stocks rose, sending the benchmark index up the most in two weeks, as investors speculated the government will take more steps to bolster economic growth.

China Life Insurance Co. paced gains by insurers as Essence Securities Co. said regulators plan to boost life and health insurance industries. SAIC Motor Corp. (600104) rallied among automakers after Nomura Holdings Inc. said banks’ new lending may reach 1 trillion yuan ($157 billion) this month. PetroChina Co. climbed 1 percent as oil traded near a seven-week high.

“The government may use measures other than interest rates to boost the economy,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “There are some company earnings that are quite bad.”

The Shanghai Composite Index (SHCOMP) climbed 0.7 percent to 2,184.84 at the close, the biggest advance since July 6. About seven stocks advanced for every two that dropped. The CSI 300 Index (SHSZ300) increased 0.4 percent to 2,424.32. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, lost 0.2 percent to 84.73 in New York yesterday.

China’s Premier Wen Jiabao will probably decide to cut banks’ reserve requirements and encourage corporate lending as the cabinet meets to discuss efforts to revive economic growth, the swap market indicates. The cost to lock in the three-month Shanghai interbank offered rate for a year tumbled 28 basis points this month to 3.16 percent, 63 basis points lower than the benchmark money-market rate and near a two-year low, according to data compiled by Bloomberg.

The MSCI Asia Pacific Index gained 1.5 percent, headed for the biggest advance since June 29, on speculation monetary easing by central banks around the world will spur economic growth.

Insurer Rules

About 6.66 billion shares changed hands in the Shanghai Composite yesterday, 13 percent lower than the daily average this year. Thirty-day volatility in the gauge was at 15.37.

Ping An increased 3.7 percent to 45.94 yuan, the biggest jump since June 13. China Life jumped 5.6 percent to 20 yuan, the highest close since May 2011. The development of life and health insurance business will bring “substantial” premium incomes to insurers, Yang Jianhai, analyst at Essence Securities, wrote in report today.

The China Securities Journal said yesterday regulators will introduce new policies to loosen restrictions on insurers’ investment in debt securities, share rights and fixed-assets.

Bank Loans

SAIC Motor gained 2.6 percent to 12.82 yuan. Great Wall Motor Co. increased 1.3 percent to 15.73 yuan.

Policy easing is picking up after bank lending reportedly increased in July, Zhang Zhiwei, an economist at Nomura, wrote in a note today. The Shanghai Securities News reported today that China’s four big banks made about 50 billion yuan of new loans in the first half of this month, twice that of the same period in June. The newspaper cited unidentified people.

The Shanghai Composite has fallen 11 percent from this year’s high recorded on March 2 as two interest-rate cuts failed to assuage concerns that earnings growth will slow. The measure is valued at 9.7 times estimated profit, compared with the 17.5 average since Bloomberg began compiling the data in 2006.

China has “relatively large” room to boost fiscal spending to support economic growth, Zhang Peng, a Beijing-based researcher with the Fiscal Research Institute at the Ministry of Finance, said yesterday in a telephone interview.

Oil Boost

PetroChina Co. gained 0.8 percent to 9 yuan, the highest close since July 6. Oil rose 0.7 percent to $90.53 a barrel in New York after U.S. gasoline stockpiles unexpectedly dropped and housing starts beat estimates.

China won’t see double-digit growth going forward as the world’s second-largest economy expands at “high single digits,” Mark Mobius, who oversees about $50 billion as the executive chairman of Templeton Emerging Markets Group, said in a Bloomberg Radio interview yesterday.

Gross domestic product rose 7.6 percent in the second quarter from a year earlier, the statistics bureau said on July 13, the sixth straight slowdown. Industrial production increased at a more moderate pace in June while retail sales growth decelerated, the data showed.

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., retreated 0.7 percent to $32.97. The Standard & Poor’s 500 Index (SPX) added 0.7 percent to 1,372.78 after U.S. housing starts increased at the fastest rate in almost four years.

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

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

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