China’s Tourism Stocks Advance After Lunar New Year Break

Chinese tourism and technology companies advanced after the week-long Lunar New Year holiday, while liquor companies fell as retail sales growth slowed.

China International Travel Service Corp. jumped after the Xinhua News Agency estimated record numbers of people may have traveled during the festival. Kweichow Moutai Co. paced declines for liquor makers as retail sales rose at the slowest pace in four years after a crackdown on extravagant spending by officials limited outlays on food and drink.

The Shanghai Composite Index was little changed at 2,432.29 at 9:57 a.m. local time, with advancers and decliners almost evenly split. The CSI 300 Index lost 0.3 percent to 2,763.37. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong slid 0.7 percent, after jumping 1.7 percent over the two days that the market was open last week.

“Stocks will play catch-up with the region after a one- week break,” Zhang Haidong, an analyst at Tebon Securities Co., said by telephone in Shanghai. “China’s shares will continue to rally because the economy is still recovering as seen in January economic data and there is sufficient liquidity. There may be some impact on consumer staples today because of weak Lunar New Year sales.”

The MSCI Emerging Markets index advanced 0.5 percent last week, while the Bloomberg China-US Equity Index of the most- traded Chinese equities in the U.S. fell 0.4 percent.

The Shanghai index has risen 24 percent from a three-year low on Dec. 3 on signs economic growth is accelerating. The gauge is valued at 13.5 times reported profit, near the highest level since Sept. 2011, data compiled by Bloomberg show.

Retail Sales

A gauge of consumer-staples producers in the CSI 300 including liquor makers declined 1.4 percent, the most among 10 industry groups. Kweichow Moutai, the biggest maker of baijiu liquor, slid 3.7 percent to 180.99 yuan, the most since Jan. 28. Wuliangye Yibin Co., the second-largest, dropped 2.4 percent to 25.29 yuan.

Sales at shops and restaurants monitored by the Ministry of Commerce increased 14.7 percent in the Feb. 9 to Feb. 15 period from the year-earlier break to 539 billion yuan ($86 billion), the ministry said in a statement on Feb. 15. That was down from a 16.2 percent pace in 2012 and the least since a 13.8 percent gain in 2009, according to previously released figures.

The New Year holiday, comparable to the peak Christmas shopping rush in the U.S., is a period when consumers in the world’s second-biggest economy splurge on food, jewelry and gifts, and government officials are wined and dined. Sales may have been damped by a campaign started by Xi Jinping, the new head of the Communist Party, to rein in lavish spending while rising incomes prompt more Chinese to travel overseas.

Record Travel

China International Travel Service advanced 1.2 percent to 30.02 yuan, on course for the highest close since Nov. 6.

A record 3.41 billion passenger trips may be made this year during the Lunar New Year, Xinhua reported on Feb. 5, citing the National Development and Reform Commission.

Sanan Optoelectronics Co., which sells light-emitting diode wafers, gained 3.7 percent to 13.56 yuan, poised for the highest close since Jan. 21.

“As the government attempts to boost the economy, it will put emphasis on technology innovation so some tech companies will benefit,” said Tebon’s Zhang. “There’s expectations of better growth.”

China will encourage investments in the so-called “Internet of Things,” according to a statement on the central government’s website. The “Internet of Things” describes data networks linking different electronics. The country will offer tax breaks to companies in the industry, according to the statement.

Economic Outlook

China’s economy averted a steep slowdown and is poised to grow “reasonably fast” as incomes in the most-populous nation rise, Li Daokui, an economist at Tsinghua University who was an adviser to the People’s Bank of China from 2010 to 2012, said in an interview with CNN that aired yesterday.

The government is scheduled to release January foreign direct investment data as early as today.

New local-currency lending was 1.07 trillion yuan in January and M2 money supply climbed 15.9 percent from a year earlier, the People’s Bank of China said on its website on Feb. 8. New loans compared with the median 1 trillion yuan estimate in a Bloomberg News survey of 28 economists and 738.1 billion yuan in January 2012. The median forecast for money supply was a gain of 14 percent.

-- Editors: Allen Wan, Chan Tien Hin

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net;

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

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