China’s Stocks Rise, Capping Biggest Weekly Gain in 13 Months

China’s stocks rose, capping the benchmark index’s biggest weekly gain in 13 months, before the release of data this weekend that may show economic growth is stabilizing.

Anhui Conch Cement Co. led a rally for cement producers after China’s new leader Xi Jinping reiterated the government will promote urban development. Kweichow Moutai Co. (600519) jumped 2.4 percent, snapping a five-day losing streak, after the biggest maker of baijiu liquor said it doesn’t put additives during production. Citic Securities Co. and Haitong Securities Co. climbed at least 2 percent after stock trading volumes surged and the Shanghai Securities News said the regulator is studying ways to expand brokerages’ financing channels.

The Shanghai Composite Index (SHCOMP) rose 1.6 percent to 2,061.79 at the close, the highest level since Nov. 12. It advanced 4.1 percent this week after sinking to the lowest since January 2009 on Dec. 3. The CSI 300 Index (SHSZ300) added 2 percent to 2,246.76. The Hang Seng China Enterprises Index (HSCEI) gained 0.9 percent.

“November data may continue to show the economic recovery is on track, helped by increases in infrastructure investment and property sales,” said Dai Ming, a fund manager at Hengsheng Hongding Asset Management Co. in Shanghai, which manages $190 million. “More investors have reached a consensus that the economy has reached a bottom in the short term.”

China’s industrial production probably accelerated for a third month to 9.8 percent from a year earlier, while retail sales probably rose 14.6 percent, the most since March, according to median estimates in Bloomberg News surveys. The figures are due Dec. 9. Credit Suisse Group AG boosted its forecasts for Chinese economic growth this year and next, saying the economy has stabilized and the risk of hard landing has abated, according to a report yesterday from economist Dong Tao.

Fiscal Policies

The Shanghai measure has fallen 6.3 percent this year, making it the worst-performing major market in Asia amid concern China’s economy will grow at its slowest pace in more than a decade this year. The measure trades at 11.4 times reported earnings, compared with 10.8 set on Dec. 3, the lowest since at least 1997, according to data compiled by Bloomberg.

China will continue proactive fiscal and prudent monetary policies, while promoting economic restructuring and urbanization, Xi was cited as saying by the official China Central Television yesterday. The Shanghai index had its biggest rally in three months on Dec. 5 as construction and cement stocks surged after the first meeting by the ruling party under Xi signaled increased urban development.

Cement Stocks

A group of material stocks in the CSI 300 advanced 2.4 percent today, the second-most among the 10 industry groups. Anhui Conch, China’s biggest cement maker, advanced 1.6 percent to 17.70 yuan. It rallied seven out of eight days with a cumulative 14 percent gain.

Credit Suisse boosted Anhui Conch’s Hong Kong stock rating to neutral from underperform and raised earnings estimates for this year and next to reflect better margins and a stable supply and demand outlook in its key operating region.

Huaxin Cement Co. (600801), the Chinese affiliate of Holcim Ltd., jumped 5.9 percent to 14.01 yuan. Jiangxi Wannianqing Cement Co. surged 4.4 percent to 11.83 yuan.

Trading volumes in the Shanghai Composite were 90 percent above the 30-day average, according to data compiled by Bloomberg. Thirty-day volatility in the index was at 16.5, compared with this year’s average of 16.9.

Brokerages Gain

A gauge of financial companies in the CSI 300 including brokerages rose 7.6 percent this week, the most among 10 industry groups. Citic Securities, China’s biggest listed brokerage, rose 2.1 percent to 10.71 yuan. Haitong Securities, the second largest, added 3.3 percent to 8.89 yuan.

The China Securities Regulatory Commission is studying ways to expand financing channels for brokerages, the Shanghai Securities News reported, without saying where it got the information.

Kweichow Moutai added 2.4 percent to 198.79 yuan, halting a five-day slide. The liquor maker said its materials used during production as well as products meet national standards. The shares have been hurt by speculation that some consumers sent samples of its white spirit to a food safety agency run by the Hong Kong government to test for plasticizer levels, according to Liu Wei, an analyst at Masterlink Securities Corp.

Wuliangye Yibin Co. (000858), China’s second-biggest maker of white liquor by market value, gained 3.4 percent to 25.61 yuan. Luzhou Laojiao Co. climbed 2 percent to 31.39 yuan.

Gree Electric Appliances Inc. (000651), China’s largest maker of home air-conditioners, lost 4.9 percent to 22.54 yuan, the biggest decline since Nov. 16, 2010. The second-largest shareholder made short-term trades in the company’s shares on Dec. 5 that violated securities rules due to a human error, Gree said in a statement.

The Bloomberg China-US 55 Index (CH55BN) rose 0.1 percent in New York yesterday. The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., added 0.4 percent to $38.27 on its third day of gains.

--Zhang Shidong. Editors: Allen Wan, Richard Frost

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

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

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