Chinese stocks rose to the highest level in more than seven months as gains by China Vanke Co. and industrial companies overshadowed declines among consumer staple and technology shares.
Vanke, China’s biggest developer, surged 10 percent after saying it plans to move trading of its foreign-currency denominated B shares to Hong Kong. A gauge of Shenzhen B shares jumped the most in more than three years. China Shipping Container Lines Co. climbed the most since November 2010 after saying it turned profitable last year. Kweichow Moutai Co. (600519) led declines among consumer-staple companies.
“B shares are doing well today as investors believe there are more companies that will soon be transferring to Hong Kong and would benefit from the increase in liquidity,” said Cao Xuefeng, an analyst at Huaxi Securities Co. in Chengdu. “Stocks have risen for a month-and-a-half without a major correction. Some investors need to take profits, so we can expect more fluctuations in the near term.”
About three stocks advanced for each one that fell in the Shanghai Composite Index (SHCOMP), which gained 0.5 percent to 2,328.22 at the close. The index has risen 19 percent since trading near a four-year low on Dec. 3 amid signs of an economic recovery and on speculation urban development would increase construction demand. The CSI 300 Index (SHSZ300), which tracks yuan-denominated shares in Shanghai and Shenzhen, surged 24 percent in that time.
The CSI 300 rose 0.6 percent to 2,610.90, while the Hang Seng China Enterprises Index (HSCEI) added less than 0.1 percent in Hong Kong. The Bloomberg China-US 55 Index of the most-traded Chinese shares in the U.S. gained 0.7 percent on Jan. 18.
Average trading volumes in the Shanghai index were 13 percent higher than the 30-day average for this time of day. Thirty-day volatility was at 20.5, compared with last year’s average of 17.1.
China Vanke (000002)’s yuan-denominated A shares climbed 10 percent to 11.13 yuan, while its B shares jumped 10 percent to 13.75 yuan, the highest close since December 2007. Both classes of stock traded for the first time since Dec. 25.
China International Marine Containers Group Co. (2039) was the first company to leave the B-share market for Hong Kong, where daily trading volume is more than 3,000 times higher, data compiled by Bloomberg show. The conversion gives Shenzhen-based Vanke increased access to foreign investors, who need government approval to buy A shares.
The Shenzhen B Share Index, which tracks 53 stocks, rose 4.7 percent, the biggest increase since Nov. 13, 2009.
A gauge of CSI 300 industrial companies rose 1.1 percent as China Shipping Container jumped 9.9 percent to 2.77 yuan, the biggest increase since Nov. 2, 2010. The company reported preliminary 2012 net income of 520 million yuan ($84 million), compared with the previous year’s loss of 2.74 billion yuan.
Coal stocks climbed after Beijing Business Today reported China’s 2013 initial-term coal supply contract, signed between producers and power companies, was 55.8 percent higher than last year. Taiyuan Coal Gasification Co. surged 10 percent to 13.64 yuan, the most since Jan. 10, 2012. Yangquan Coal Industry Group Co. climbed 6.9 percent to 15.28 yuan.
An index of CSI 300 information-technology shares lost 1.4 percent, the second-worst performer of 10 industry gauges, after it surged 7.1 percent last week. The measure trades for 18.6 times estimated profit, more than the CSI 300’s 10.8 times, data compiled by Bloomberg show. Goertek Inc. (002241), a supplier of Apple Inc., sank 3.8 percent to 38.19 yuan.
A measure of consumer-staples shares was the CSI 300’s worst performing industry, dropping 2 percent today. The gauge trades at 12.9 times estimated profit. Kweichow Moutai, China’s biggest liquor maker by market value, lost 3.2 percent to 197.31 yuan.
An oversupply of liquor products “may persist for some time, leading to a decline in share prices” of producers, Huaxi Securities’ Cao said.
The iShares FTSE China 25 Index Fund climbed 0.8 percent in New York on Jan. 18 after Chinese data showed the nation’s economy grew faster than estimated in the fourth quarter.
China’s growth rebound may be capped by a labor-force squeeze and shrinking resources that leave the government satisfied with rates of expansion as low as half the peak during the past decade.
A pace of 7 percent to 8 percent reflects economic forces, Ma Jiantang, head of the National Bureau of Statistics, said on Jan. 18 after reporting 7.9 percent expansion in the fourth quarter from a year earlier. He said a decline last year in the working-age population was of “great importance.”
The China Securities Regulatory Commission said 10 applications were approved out of 175 companies that have submitted applications for initial public offerings on the Shanghai exchange as of Jan. 17. In Shenzhen, 32 applications were approved out of 363 companies applying for IPOs, it said.
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