China’s stocks rebounded from a three-month low, as property shares jumped on speculation the government won’t impose any more real-estate curbs as economic growth slows and lower oil boosted auto companies and airlines.
China Vanke Co. (000002) and Poly Real Estate Group Co. led a gauge of developers to its biggest gain since February. SAIC Motor Corp. (600104) and China Eastern Airlines Co. rose at least 3.6 percent after Brent crude fell below $100 a barrel for the first time since July. China Life Insurance Co. and Ping An Insurance (Group) Co. gained after the government said it will allow shareholders to take bigger stakes in insurers.
“There was bargain hunting as investors took advantage of the earlier slump and the policy risk of property stocks has almost faded,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Concern about economic growth lingers and will weigh on sentiment.”
The Shanghai Composite Index (SHCOMP) rose 0.6 percent to 2,194.85 at the close, erasing a loss of as much as 0.7 percent. The CSI 300 Index added 0.9 percent to 2,459.59. The Hang Seng China Enterprises Index (HSCEI) gained 0.3 percent.
The Shanghai index has fallen 9.8 percent from a Feb. 6 high amid concern steps to cool property prices will drag on growth. The Bloomberg China-US 55 Index (CH55BN) slid 3.3 percent yesterday and the Standard & Poor’s 500 Index fell 2.3 percent. U.S. stocks extended losses after explosions rocked the finish line area of the Boston Marathon. Three people were killed and at least 128 people were hospitalized, officials said.
China’s statistics bureau said yesterday the economy grew 7.7 percent in the first quarter, less than the 8 percent median forecast in a survey of 41 economists. At least four brokerages cut their growth forecasts after the data, including JPMorgan Chase & Co., Daiwa Capital Markets, Nomura Holdings Inc. and Mizuho Securities Asia Ltd.
China should “fine tune” its economic policies in the short-term to maintain “reasonable” growth, according to a front-page commentary in the China Securities Journal today. China is expected to keep a “neutral” monetary policy, according to the commentary.
“Monetary policy will likely remain tight given simultaneous food and housing inflation, and hence lead to weak growth,” Hao Hong, Bank of Communications Co.’s Hong Kong-based China strategist, wrote in an e-mailed response to questions. “Swine and avian diseases will likely create a food supply shortage in the second half of the year, and thus food inflation.” Fourteen people have died from the H7N9 avian influenza.
Valuations on the Shanghai gauge dropped to 9 times projected 12-month earnings, near the lowest level since Dec. 13 and less than the seven-year average of 15.8, data compiled by Bloomberg show.
The 14-day relative strength measure for the Shanghai Composite, measuring how rapidly prices have advanced or dropped during a specified time period, was at 31.8 yesterday. Readings below 30 indicate it may be poised to rise.
The Shanghai property stock index gained 3.8 percent today, the highest close since March 1. Vanke, the nation’s biggest listed property developer, rose 5.5 percent to 11.64 yuan. Poly Real Estate Group Co. (600048), the second largest, jumped 6 percent to 12.46 yuan. Gemdale Corp. surged 6.8 percent to 7.42 yuan.
“As uncertainties remain, investors are looking for areas with less negative news for return,” said BoCom’s Hong. ‘Property is such a candidate -- with the curbs already strict enough and probably cannot be any tighter. The sector has performance to show for itself.’’
The statistics bureau is due to release March property prices on April 18.
SAIC, China’s largest carmaker, climbed 3.8 percent to 15.49 yuan. China Eastern, the nation’s second-largest carrier, gained 3.6 percent to 3.16 yuan. Brent futures slid as much as 2.6 percent to $98 a barrel.
China Life, the nation’s biggest insurer, rose 2.2 percent to 17.42 yuan. Ping An (601318), the second largest, added 2.5 percent to 41.53 yuan.
China will allow some single shareholders to hold a stake of more than 20 percent in insurance companies, according to a statement posted on the website of China Insurance Regulatory Commission.
Trading volumes in the Shanghai Composite were 21 percent lower than the 30-day average today, according to data compiled by Bloomberg. Thirty-day volatility on the gauge was at 17.3, the lowest level since Feb. 20, the data showed.
Zijin Mining Group Co. (601899), China’s biggest gold producer, slid 1.3 percent to 3.16 yuan, extending yesterday’s 5.6 percent loss. The stock closed at its lowest level since Jan. 13, 2009. Zhongjin Gold Co. (600489), the country’s third-largest bullion producer, retreated 3.3 percent to 12.51 yuan.
Investors should keep away from Hong Kong-traded gold miners including Zijin Mining and Zhaojin Mining Industry Co. because of their “high earnings sensitivity” to the bullion price, Richard Gao, an analyst at Guosen Securities Co., wrote in a note today.
The Standard & Poor’s GSCI Spot Index of 24 raw materials dropped 2.3 percent to 608.83 yesterday, the lowest settlement since July 10. Gold prices tumbled 9.3 percent, crude oil slid 2.8 percent and copper fell 2.3 percent.
Investors are concerned the plunge in gold prices may trigger equity sales in order to cover losses, Lee Boon Keng, head of Bank Julius Baer & Co.’s investment solutions group in Singapore, said by phone today.
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., dropped 3 percent, the most since June. Yanzhou Coal Mining Co. (YZC) plunged 7.4 percent to trade at the biggest discount to its Hong Kong stock since October.
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