China’s stocks rose for a sixth day, the longest stretch of gains in four months, after automakers rallied on improving earnings and Shenyin & Wanguo Securities Co. recommended power producers on valuations.
Chongqing Changan Automobile Co. surged 10 percent after partner Ford Motor Co. reported a jump in July sales. SAIC Motor Corp. and Hisense Electric Co. led a gauge of consumer-discretionary stocks to the biggest gain among industry groups. Huaneng Power International Inc. (902) surged 4.6 percent after Shenyin & Wanguo advised buying the shares. Poly Real Estate Group Co. fell 1.5 percent after the nation’s economic planning agency signaled the government would maintain real-estate curbs.
The Shanghai Composite Index (SHCOMP) added 0.5 percent to 2,060.50 at the close, the highest level since July 16. Premier Li Keqiang’s policies to boost domestic consumption are working amid recent government data showing improvements in the services trade, Zhang Haidong, an analyst at Tebon Securities Co., said by phone from Shanghai.
“Investors decided to bet on consumer stocks that will benefit from key reforms boosting local consumption,” Zhang said.
Trading volumes in the Shanghai index were 10 percent higher than the 30-day average, data compiled by Bloomberg show. The CSI 300 Index rose 0.7 percent to 2,293.64. The Hang Seng China Enterprises Index (HSCEI) lost 0.8 percent. The Bloomberg China-US 55 Index fell 0.8 percent in New York yesterday.
SAIC Motor, the biggest-listed Chinese automaker, climbed 5.4 percent to 13.34 yuan. Chongqing Changan, which last month estimated first-half profit more than doubled, surged 10 percent to 10.21 yuan. Ford Motor reported a 71 percent jump in vehicles sales last month.
Macquarie Group forecasts Chinese auto sales growth in the second half will exceed last year’s level, Janet Lewis, a Hong-Kong based analyst, said by phone today. “We’d be looking for around ten percent growth for the rest of the year,” which is an improvement from last year, Lewis said by phone today.
A measure of consumer-discretionary stocks in the CSI 300 gained 3.6 percent, the biggest advance among 10 industry groups. Hisense Electric jumped 6.3 percent to 13.49 yuan. GD Midea Holding Co. rose 3.2 percent to 13.86 yuan.
China is transforming its economy to focus more on domestic consumption and less on smokestack industries, Premier Li’s cabinet said last month. An official gauge of the services trade accelerated for the first time since March, according to data from the National Bureau of Statistics and China Federation of Logistics and Purchasing.
Changes in China’s household-registration policies may “unlock” consumption, JPMorgan Asset Management fund manager Lilian Leung said yesterday from a briefing in Hong Kong. Leung, who is positive on the long-term consumption theme, said valuations of A shares are unlikely to see a further de-rating.
Huaneng Power jumped 4.6 percent to 5.87 yuan. GD Power Development Co. climbed 2.6 percent to 2.36 yuan. Both stocks were recommended by Shenyin & Wanguo Securities.
Valuations of Chinese thermal-power stocks have “safety margins” and shares have priced in possible tariff cuts, analyst Liu Xiaoning wrote in a report today. Power stocks trade at 10 times estimated earnings for 2013, lower than the historical average, the report said.
China Vanke Co., the biggest Chinese developer, lost 0.6 percent to 9.93 yuan. Poly Real Estate Group Co., the second largest, lost 1.5 percent to 10.82 yuan.
National Development and Reform Commission Chairman Xu Shaoshi said yesterday macro-control policies for real estate will continue. Investors are getting mixed signals on the property market after a Politburo report last week didn’t mention any curbs, said Zeng Xianzhao, an analyst at Everbright Securities Co. in Chongqing.
The Shanghai measure trades at 8.3 times 12-month projected profit, compared with 10 times for the MSCI Emerging-Markets Index, data compiled by Bloomberg show.
Data on trade, industrial output and inflation are expected to be released later this week. China’s overseas shipments are expected to have gained 1.5 percent from a year ago, compared with a 3.1 percent decline in June, according to estimates of 18 economists compiled by Bloomberg. Inflation is poised to quicken to 2.8 percent in July from 2.7 percent the previous month, according to another survey.
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