China’s benchmark stock index rose, paring a weekly loss, after valuations dropped to the lowest level in three months. Airlines and railway shares advanced, overshadowing losses by property developers.
The Shanghai Composite Index (SHCOMP) climbed 0.4 percent to 2,278.40 at the close, after rising as much as 1.8 percent and falling as much as 0.9 percent. A gauge of volatility jumped to a 10-month high. The index is valued at 9.4 times projected 12- month earnings, according to data compiled by Bloomberg. The multiple dropped to 9.3 on March 13, the lowest since Dec. 21. Hainan Airlines Co. (600221) rallied 10 percent and Daqin Railway Co. advanced the most in almost a month.
“Stock valuations are low,” said Zhang Ling, general manager at Shanghai River Fund Management Co. “From a five-year horizon, prices will definitely be higher than the current level as China’s economy is still growing. There are also expectations that the new premier will tackle structural problems such as high property prices and will boost consumption.”
The Shanghai Composite dropped 1.7 percent this week amid concern the government is intensifying measures to curb asset bubbles and after industrial production and new lending data missed estimates. The 100-day volatility was at 19.2 today, the highest since May, while trading volumes were 4.1 percent lower than the 30-day average, according to Bloomberg data.
The CSI 300 Index added 0.2 percent to 2,539.87 today, while the Hang Seng China Enterprises Index (HSCEI) fell 0.7 percent, retreating 9.8 percent from a Feb. 1 high. The Bloomberg China- US 55 Index (CH55BN) climbed 0.6 percent yesterday in New York.
Hainan Airlines surged by the 10 percent daily limit to 4.52 yuan after proposing to shareholders 10 bonus stocks for every 10 held. Net income fell 27 percent last year, the carrier said in a statement yesterday.
Air China Ltd. (601111), the nation’s largest international carrier, gained 6.4 percent to 5.67 yuan. China Southern Airlines Co., the country’s biggest carrier by fleet size, added 3.6 percent to 3.77 yuan. China should invest to build more airports, the Shanghai Securities News reported today, citing the head of the nation’s aviation administration.
Daqin Railway, the operator of China’s biggest coal transport network, gained 4.1 percent to 7.82 yuan, the most since Feb. 18. Guangshen Railway Co. (601333), the operator of trains in China’s richest province, rose 2.7 percent to 3.06 yuan.
The State Council approved a plan to make China Railway Corp. in charge of railway operations, according to a statement on the central government website yesterday. Tax breaks will be offered to the new company, the statement said.
A measure of property stocks slid 0.9 percent today, the most among the five industry groups in the Shanghai Composite. It declined 3.2 percent this week after the southern city of Shenzhen said it will continue to implement measures to ensure home prices don’t rise too quickly. The Shanghai Securities News reported yesterday Beijing will strengthen review of homebuyers’ qualifications to purchase property in the capital.
China Vanke Co., the nation’s biggest listed property developer, slid 3 percent to 10.48 yuan, capping a 4.4 percent decline this week. Poly Real Estate Group Co., the second largest, dropped 4.1 percent to 10.65 yuan for a 6.4 percent weekly loss.
Ping An Insurance (Group) Co. (601318), China’s second-biggest insurer, fell 2 percent to 41.92 yuan. Net income climbed 3 percent from a year earlier to 20.1 billion yuan ($3.2 billion) in 2012, as banking income expanded and premium income grew. The profit compared with a 21.37 billion yuan mean estimate of 27 analysts surveyed by Bloomberg News.
--Zhang Shidong. Editors: Allen Wan, Chan Tien Hin
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