China’s Stocks Rise as Solar, Technology Shares Extend Rallies

China’s stocks rose for the fifth time in six days as solar and technology companies extended a rally on government measures to support the industries, overshadowing a decline for property developers.

Xi’an LONGi Silicon Materials Co. jumped 10 percent after China said it plans to increase fivefold its installed solar capacity. BOE Technology Group Co. and Sanan Optoelectronics Co. led technology companies to the biggest gain among industry groups. Hangzhou Binjiang Real Estate Group Co. (002244) dropped 1.2 percent after the China Securities Journal said Hangzhou city may start a property tax trial.

The Shanghai Composite Index (SHCOMP) gained 0.3 percent to 2,065.72 at the close, with trading volumes 2.1 percent higher than the 30-day average. The CSI 300 Index rose 0.5 percent to 2,317.85 and the Hang Seng China Enterprises Index (HSCEI) added 0.1 percent. The Bloomberg China-US 55 Index added 1 percent yesterday.

“Smaller companies and thematic investments are the highlights of the market especially those that get support from the government,” said Wei Wei, an analyst at West China Securities Co. “The economy is lackluster and growth may trend down further. The expansion of a property tax could add more uncertainty to the already weak economic fundamentals.”

The Shanghai Composite has fallen 9 percent this year as data from industrial production to exports pointed to a slowdown in the economy and as money-market rates reached record highs last month. The measure trades at 8.5 times 12-month projected profit after valuations fell in June to the lowest level in at least five years, according to data compiled by Bloomberg.

Slowing Growth

Mizuho Financial Group Inc. and Standard Chartered Plc today cut their growth forecasts for the Chinese economy this year to 7.6 percent and 7.5 percent respectively. The lower targets come a day after the government reported growth slowed to 7.5 percent in the second quarter from the previous quarter’s 7.7 percent expansion.

China plans to boost technology and speed up the development of less energy-intensive and polluting industries as part of a drive to upgrade the structure of the economy and shift growth toward domestic demand, according to a July 12 statement on the central government website. Construction and upgrading of Internet and communications infrastructure will be accelerated, the statement said.

Information technology and energy conservation are the two industries “chosen for stabilizing growth,” Bank of America Corp.’s China economist Ting Lu wrote in a report dated yesterday. “At present the government still focuses on industry policies instead of more fundamental structural reforms, in line with our view that markets must be patient in waiting for real institutional reforms.”

Industry Policies

The State Council may release economic plans for the second half tomorrow, the 21st Century Business Herald reported today, without saying where it got the information.

Zhejiang Sunflower Light Energy Science & Technology Co. (300111) surged 2.5 percent to 12.11 yuan, adding to yesterday’s 2.9 percent rally. Xi’an LONGi jumped for a fifth day, adding 1.05 yuan to 11.55 yuan. Risen Energy Co. climbed 7.8 percent to 7.23 yuan.

China, the world’s biggest maker of solar panels, plans to add 10 gigawatts of solar power a year during the next three years, according to a statement from the State Council posted on the government’s website yesterday. The plan would increase the nation’s solar installed capacity fivefold to more than 35 gigawatts by 2015.

Technology Stocks

A measure of technology stocks was the best performing industry group for a second day, gaining 1.8 percent.

BOE, China’s biggest maker of liquid-cystal-display panels, jumped 5.3 percent to 2.39 yuan, adding to yesterday’s 1.8 percent advance. The company on July 14 estimated it will swing to a first-half net profit of up to 860 million yuan ($140 million) from a loss the same time last year. Sanan Optoelectronics gained 5.8 percent to 20.50 yuan.

Hangzhou Binjiang lost 1.2 percent to 8.95 yuan. Hangzhou may be the third city after Shanghai and Chongqing to start a property tax trial in China, the China Securities Journal reported yesterday, without saying where it got the information.

Three calls to the Hangzhou city government news office went unanswered today. Government data yesterday showed China’s home sales rose 24 percent in June, the biggest monthly gain this year, signaling that the government’s latest property measures are failing to deter buyers.

PetroChina Co. and China Petroleum and Chemical Corp. led a measure of energy companies to the biggest decline among CSI 300 industry groups. PetroChina fell 1.4 percent to 7.99 yuan, the most in three weeks. Sinopec, Asia’s biggest refiner, declined 1.3 percent to 4.50 yuan.

Crude oil has leaked from a cracked pipeline in the Changqing oilfield owned by PetroChina in the northwestern province of Shaanxi, the Securities Times reported, citing local village residents. Changqing is PetroChina’s biggest field in China, producing about 50 million metric tons of oil and gas a year.

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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