China’s Stocks Rise for First Time in Four Days; Developers Gain

Chinese stocks rose, sending the benchmark index higher for the first time in four days, as an advance by property developers overshadowed declines by auto- related companies.

Poly Real Estate Group Co. (600048) and Gemdale Corp. (600383) led gains for real-estate shares after the companies reported increased net income for the third quarter. Liquor maker Xinjiang Yilite Industry Co. (600197) jumped by the 10 percent daily limit after profit surged in the third quarter. BYD Co., the automaker part-owned by Warren Buffett’s Berkshire Hathaway Inc., lost 1.2 percent after saying full-year profit may tumble 98 percent.

“The market will probably stabilize at this level given losses over the past few days and inexpensive valuations,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million.

The Shanghai Composite Index (SHCOMP) rose 0.2 percent to 2,062.35 at the close, snapping a three-day, 2.7 percent retreat. The CSI 300 Index (SHSZ300) added 0.2 percent to 2,239.88. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong fell 0.9 percent. Equity trading on U.S. exchanges will be canceled for a second day as Hurricane Sandy bore down on New York City.

The Shanghai gauge is now within 2.8 percent from this year’s closing low set on Sept. 26. The index has lost 6.2 percent in 2012 on concern earnings growth will decelerate. It trades at 9.7 times estimated earnings for 2012, compared with the 17.8 average multiple since Bloomberg began compiling the weekly data in 2006. About 6 billion shares changed hands in Shanghai today, 21 percent lower than the daily average in 2012.

Economic Data

The National Bureau of Statistics and China Federation of Logistics and Purchasing are due to release an October manufacturing index on Nov. 1. The Purchasing Managers’ Index probably rose to 50.3 from 49.8 last month, according to the median estimate of 24 analysts in a Bloomberg survey. Fifty is the dividing line between expansion and contraction.

Bank of America Corp. raised its China 2012 gross domestic product growth forecast to 7.7 percent from 7.6 percent, according to an e-mailed report from Lu Ting and Larry Hu, economists at the U.S. bank. It also raised the 2013 GDP growth forecast to 8.1 percent from 7.6 percent.

A gauge tracking property stocks on the Shanghai Composite advanced 1.2 percent, the first advance in six days.

Poly Real Estate, China’s second-largest developer by market value, rose 2.5 percent to 10.98 yuan after saying third- quarter profit jumped 95 percent from a year earlier.

Gemdale, the fourth biggest, advanced 2.2 percent to 5.11 yuan after net income rose to 418 million yuan ($67 million) for the three months ending on Sept. 30 from 1.54 million yuan a year earlier.

Auto Earnings

Xinjiang Yilite surged 10 percent to 13.09 yuan. Third- quarter profit jumped 297 percent from a year earlier, the liquor maker said in a statement yesterday.

The benchmark money-market rate dropped the most in nine months after the central bank pumped a record amount of cash into the financial system. The People’s Bank of China offered 290 billion yuan of seven-day reverse repurchase agreements at a yield of 3.35 percent and 105 billion yuan of 28-day contracts at 3.6 percent, according to a trader who participates in the auctions.

BYD slipped 1.2 percent to 14.18 yuan. The company said yesterday that net income this year may fall as much as 98 percent, as a slowing global economy damps demand for its cars. Third-quarter profit declined 94 percent.

Pang Da Automobile Trade Co. (601258), China’s biggest listed auto dealer, sank 7.4 percent to 5.10 yuan after posting a net loss of 516 million yuan.

Cautious View

Some 706 companies in the Shanghai Composite have reported third-quarter earnings with an average drop of 7.9 percent from a year earlier, according to data compiled by Bloomberg. Publicly traded companies are required to release results by the end of the month.

Essence Securities Co, which was ranked No. 2 for equity strategy research by New Fortune magazine last year, is cautious on China’s stocks in November and December.

The securities regulator may resume a normal pace of share sales after next month’s Communist Party Congress while small- company equities and growth stocks may decline before the expiry of so-called lock-up periods, Cheng Dinghua, an analyst at the brokerage, wrote in a report dated yesterday.

More than 190 billion yuan worth of shares in 74 listed companies will become tradable on the markets next month, the official Xinhua News Agency reported yesterday, citing data from the Shanghai and Shenzhen stock exchanges.

Thirty-day volatility in the Shanghai Composite was at 17.2 today, matching this year’s average.

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

To contact the editors responsible for this story: Allen Wan at awan3@bloomberg.net; Darren Boey at dboey@bloomberg.net

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