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China’s Stocks Rise on Speculation of Market-Boosting Measures
China’s stocks rose for a second day on speculation regulators will introduce measures to bolster equities after the benchmark index dropped to the lowest levels since 2009.
The Shanghai Composite Index (SHCOMP) climbed 0.3 percent to 2,033.19 at the close, erasing a loss of as much as 1.1 percent. Regulators may introduce “concrete” measures to boost the stock market should the Shanghai index fall below the 2,000 level, according to Shenyin & Wanguo Securities Co. Anhui Conch Cement Co. (600585) and Gansu Qilianshan Cement Group Co. jumped more than 3 percent after Shenyin & Wanguo said prices of the building material rose last week. Poly Real Estate Group Cp. led property developers to the biggest gain among industry groups.
“With the Shanghai Composite close to 2,000, there’s speculation among investors that the government may unveil some market-boosting measures,” said Wu Kan, Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “They will focus on boosting confidence in the short term.”
The CSI 300 Index (SHSZ300) added 0.8 percent to 2,215.52 today, while the Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong dropped 0.6 percent. The Bloomberg China-US 55 Index (CH55BN) of Chinese companies traded in the U.S. added 0.7 percent in New York on Sept. 21.
The Shanghai index plunged 4.6 percent last week after a report on manufacturing signaled a contraction and escalating tensions with Japan threatened trade. For the year, it’s down 7.6 percent on concern the government isn’t loosening monetary policy or introducing stimulus policies fast enough to counter the slowdown in the economy. It’s valued at 9.4 times estimated earnings, compared with the average of 17.4 since Bloomberg began compiling the weekly data in 2006.
The Shanghai index may rebound by about 10 percent should it breach 2,000, Ling Peng, a strategist at Shenyin & Wanguo, wrote in a report dated Sept. 21. The Shanghai-based brokerage was ranked No. 1 for equity strategy research by New Fortune magazine in 2010.
The China Securities Regulatory Commission will implement measures to raise the level of returns for investors in capital markets, the Securities Daily reported today, citing Zhang Yujun, assistant chairman at the regulator.
So far this year, the CSRC has expedited approvals of foreign investors, cut stock-trading fees by 25 percent and allowed individual investors to advise on pricing initial public offering shares as part of efforts to boost the market.
Metallurgical Corp. of China Ltd., the construction company that helped build the “Bird’s Nest” Olympic stadium in Beijing, gained 2 percent to 2.03 yuan after the company said executives bought back shares on Sept. 20 and Sept. 21. The shares have plunged 23 percent this year.
Anhui Conch, China’s biggest cement maker, added 3.7 percent to 15.27 yuan. Gansu Qilianshan Cement jumped 5.8 percent to 11.35 yuan. Huaxin Cement Co. (600801), the Chinese affiliate of Holcim Ltd., gained 3.9 percent to 10.90 yuan.
Cement prices rose between 10 yuan and 30 yuan in eastern provinces of Jiangsu and Anhui last week, Wang Siyu and Zhang Shengxian, analysts at Shenyin & Wanguo Securities, wrote in report dated yesterday.
Prices in east China and Guangdong and Guangxi provinces may rebound further on expectations of economic stabilization policies and as some factories halt production to improve profitability, the report said.
A gauge of property developers in the Shanghai index rose 0.9 percent, the most among five industry groups. Poly Real Estate, the second-largest developer, surged 2.7 percent to 10.12 yuan. China Vanke Co., the biggest, added 1 percent to 7.89 yuan.
Chinese property companies are paying the least in almost two years to sell dollar-denominated debt as investors bet that the new Communist Party leadership to be announced next month will ease curbs on the housing market.
Premier Wen Jiabao said this month that property market controls had achieved “obvious results,” giving his likely successor Vice Premier Li Keqiang room to loosen policies during the transition of power and support an economy growing at the slowest pace since 1999.
The Shanghai Composite fell earlier today after Song Guoqing, an academic adviser to the People’s Bank of China, said the economic slowdown may persist into 2013 amid a lack of funding for approved infrastructure projects.
The economy will grow between 7.3 percent and 7.4 percent in the fourth quarter and 7 percent to 7.5 percent in the first half next year, Song, a Peking University professor, said in an interview in Beijing on Sept. 21. He reiterated a July forecast of 7.4 percent third-quarter growth that was lower than most economists’ projections then and is now in the middle.
China Beige Book
Downward pressure on the economy is increasing, the Economic Information Daily reported, citing the transcript of a speech by Zhang Ping, head of the National Development and Reform Commission.
China’s manufacturers and retailers are less optimistic about sales than they were three months ago and more companies are cutting jobs, according to a survey by CBB International LLC modeled on the U.S. Federal Reserve’s Beige Book.
Thirty-day volatility in the Shanghai Composite was at 17.6 today, compared with this year’s average of 17. About 5.8 billion shares changed hands in the gauge, 25 percent lower than the daily average this year.
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