China’s Stocks Advance as Party Ends Meeting, Yuan Strengthens
China’s stocks climbed, led by material producers, after the ruling party’s once-in-a-decade meeting to choose new leaders drew to a close and the yuan rose to a 19-year high.
Nanzhi Co. (600163) led a rally among paper makers as a stronger Chinese currency reduces costs from importing pulp. Aluminum Corp. of China Ltd. jumped the most in two months after the China Securities Journal said the government will start buying aluminum to add to reserves. China International Travel Service Corp. (601888), the largest tourism company by market value, tumbled by the 10 percent daily limit on a plan to sell new shares.
The Shanghai Composite Index (SHCOMP) rose 0.4 percent to 2,055.42 at the close. The CSI 300 Index added 0.5 percent to 2,223.11. Vice President Xi Jinping and Vice Premier Li Keqiang were re- appointed to the Communist Party’s central committee today, while members of the Politburo Standing Committee, the top decision-making body, will be elected tomorrow in Beijing.
“The conclusion of the party congress removes some political uncertainty and will help reduce the equity risk premium,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai.
The Shanghai Composite’s trading volume dropped to the lowest level since Aug. 31 today, with 4.8 billion shares changing hands, according to data compiled by Bloomberg. The index’s 30-day volatility was at 14.2, compared with this year’s average of 17.2. The gauge trades at 9.8 times estimated profit for 2012, compared with the 17.8 average multiple since Bloomberg began compiling the weekly data in 2006.
The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong climbed 1.1 percent. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, fell 2.2 percent in New York yesterday.
The yuan climbed as much as 0.02 percent to 6.2252 per dollar in Shanghai, according to the China Foreign Exchange Trade System. That’s the strongest level since China unified official and market exchange rates at the end of 1993.
Nanzhi, a paper maker in the southern province of Fujian, jumped by the 10 percent daily cap to 3.85 yuan. Mudanjiang Hengfeng Paper Co. gained 2.6 percent to 6.40 yuan. Shandong Bohui Paper Industrial Co. (600966) rose 1.4 percent to 4.50 yuan.
A gauge of material stocks in the CSI 300 rose 1.2 percent, the most among 10 industry groups. Aluminum Corp., the listed unit of the biggest maker of the lightweight metal, surged 4.7 percent to 4.95 yuan, the most since Sept. 7. Yunnan Aluminium Co. (000807), the fifth largest, rose 2.7 percent to 4.98 yuan.
The China State Bureau of Material Reserve will soon start buying the first batch of 160,000 tons of aluminum for reserves, the China Securities Journal reported. Yunnan Aluminium, Jiaozuo Wanfang Aluminum Manufacturing Co. and Henan Shenhuo Coal & Power Co. are among companies that could bid to sell aluminum to the bureau, the newspaper said.
The Shanghai Composite retreated 2.4 percent during the 18th Communist Party Congress period, which started Nov. 8. Xi is forecast to assume the state presidency from Hu Jintao in March, when Li is set to take over the premiership from Wen Jiabao.
Other members re-elected today to the Central Committee include Vice Premier Zhang Dejiang, Shanghai party boss Yu Zhengsheng and propaganda minister Liu Yunshan, according to a list published by the official Xinhua News Agency. Members of the ruling Politburo and its standing committee, which exercises ultimate power in China, are drawn from the group’s ranks.
Vice Premier Wang Qishan, China’s counterpart to U.S. Treasury Secretary Timothy Geithner, was named to the party’s discipline body, indicating he won’t have a post directly overseeing the economy in a new government.
China International Travel tumbled 10 percent to 28.49 yuan. The stock resumed trading after the company said it plans to sell 98.5 million shares at 26.93 yuan each through a private placement. The stock traded at 31.66 yuan on Nov. 6 before being suspended.
Yuan-denominated shares may catch up to gains in Chinese companies listed in Hong Kong as the nation’s economy improves, Jing Ulrich, Hong Kong-based chairman of global markets for China at JPMorgan Chase & Co., said in a Bloomberg Television interview today.
Industrial production, fixed-asset investment, retail sales and exports growth exceeded economists’ estimates last month, according to government reports. The Hang Seng China Enterprises Index (HSCEI) had rallied 10 percent through yesterday since the start of September, compared with a less than 0.1 percent gain for the Shanghai Composite.
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., declined 1.6 percent to a one- month low of $35.98 yesterday.
--Zhang Shidong. Editors: Darren Boey, Allen Wan
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