China’s stocks rose the most in a week, led by financial companies, after valuations on the benchmark index dropped to a four-month low.
Poly Real Estate Group Co. and Haitong Securities Co. advanced at least 1.4 percent, driving financial stocks to the biggest gain in two weeks. Drugmaker Yunnan Baiyao Group Co. and Goertek Inc., a supplier to Apple Inc., surged to record highs. BYD Co., the automaker partially owned by Warren Buffett’s Berkshire Hathaway Inc., jumped 6.5 percent after the Shanghai Securities News reported the government may issue subsidies for renewable-energy cars.
The Shanghai Composite Index (SHCOMP) rose 1.4 percent to 2,205.50 at the close, rebounding from the lowest level since Dec. 24. The benchmark index slipped 0.2 percent yesterday after a private report showed decelerating manufacturing growth. Data today showed service industries expanded at a slower pace.
“This is a technical rebound after investors digested bad manufacturing data yesterday,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu.
The index, which had the biggest advance since April 24, traded at 11.7 times reported profit yesterday, the lowest level since Dec. 14, according to data compiled by Bloomberg.
The CSI 300 Index added 1.8 percent to 2,492.91 today, while the Hang Seng China Enterprises Index (HSCEI) rose 0.3 percent. The Bloomberg China-US 55 Index advanced 0.5 percent yesterday. Trading volumes on the Shanghai measure were 2.5 percent below the 30-day average today, data showed.
The Shanghai gauge has slumped 9.4 percent from a Feb. 6 high on concern slowing economic growth is hurting earnings. Quarterly profit at 53 percent of the companies in the Shanghai index missed estimates, according to data on 224 corporate results compiled by Bloomberg since Feb. 16.
A gauge of financial companies including banks, brokerages and developers in the CSI 300 jumped 2.2 percent, the second most among 10 industry groups. Poly Real Estate, the No. 2 Chinese developer, rose 1.4 percent to 12.04 yuan. Haitong Securities, the second-largest brokerage, advanced 4 percent to 11.20 yuan. China Construction Bank Corp. (939), the No. 2 lender, surged 1.9 percent to 4.80 yuan. Ping An Bank Co. gained 4.3 percent to 19.73 yuan.
Chinese developers remain confident of achieving 2013 targets, with many of them expecting a pick up in sales in May, according to a HSBC Holdings Plc report today. Macquarie Group Ltd. said it likes Chinese banks as they continue to show “stable and sticky earnings power,” according to a report today. China’s four largest banks defied a sluggish economy to report record quarterly profits in the first three months.
The non-manufacturing Purchasing Managers’ Index fell to 54.5 from 55.6 in March, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in a statement today. The services data come after official and private manufacturing reports this week showed a weaker expansion.
The services report shows weakening demand and easing price pressures, providing policy makers more flexibility to adjust the pace of policy tightening, Nomura Holdings Inc. economist Zhang Zhiwei wrote in a report today.
China is due to report April trade and inflation data next week. The country will probably post a 10 percent gain in exports from a year ago, unchanged from the previous month, according to the median estimate of 12 economists surveyed by Bloomberg. Inflation will quicken to 2.2 percent in April from 2.1 percent in March, another survey showed.
Yunnan Baiyao drove health-care stocks to the biggest advance among CSI 300 groups, gaining 3.5 percent to 89.04 yuan. The gauge of drugmakers has jumped 20 percent this year, the best-performing group after phone stocks.
BYD led consumer-discretionary companies to the third biggest gain among groups, surging 6.5 percent to 26.20 yuan. The Shanghai Securities News reported minimum subsidies for renewable-energy cars may be more than 3,000 yuan ($487). Goertek jumped 5.6 percent to 57.01 yuan, poised for the highest level since the shares started trading in May 2008.
Smaller companies such as those in the technology and health industries “are more insulated from slowing economic growth than larger companies,” Mao said.
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., added 0.5 percent to $37.38 in New York. The Standard & Poor’s 500 Index climbed 0.9 percent after American jobless claims unexpectedly fell and the European Central Bank cut interest rates to a record low.
“The ECB’s rate cut should help demand and economic growth in Europe but it’s still a very fragile economy,” Timothy Ghriskey, chief investment officer at Solaris Group LLC in New York, said by phone. The outlook for Europe and China’s slowdown “keeps us, at least right now, on the sidelines in China in terms of investing. There’s just too much uncertainty for us to step up and take a position.”
-- Editors: Allen Wan, Darren Boey
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