China’s stocks rose for the first time in four days as railway companies rallied on prospects for increased investment, overshadowing concern the government will step up measures to rein in rising home prices.
Train makers China CNR Corp. (601299) and CSR Corp. advanced at least 7 percent after National Business Daily reported state-owned China Railway Corp. will increase investment in new projects this year. Kweichow Moutai Co., the biggest maker of baijiu liquor, climbed the most in almost a month. Poly Real Estate Group Co. slid 2.1 percent, dragging down a measure of property companies to the lowest level in two months.
The Shanghai Composite Index (SHCOMP) gained 0.2 percent to 2,109.47 at the close, erasing a loss of as much as 0.6 percent. Industrial output rose 10.3 percent in October, while the inflation rate was 3.2 percent, weekend reports showed. Beijing banned the presale of new homes of a certain size, the official Xinhua News Agency reported yesterday, while Shanghai raised the minimum down payment required for buyers of a second home.
“The economic data were almost in line and the market has no catalysts or excitement now,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “There’s no news from the Communist Party’s meeting so far and investors have pretty high expectations for reform measures. The policy risk is the biggest one facing the real estate industry now.”
The Shanghai index has dropped 13 percent from this year’s high set on Feb. 6 on concern economic growth will slow in the fourth quarter. The measure trades at 8.4 times projected profit for the next 12 months, compared with the seven-year average of 15.3, according to data compiled by Bloomberg.
CSR, the nation’s biggest train maker, gained 7.2 percent to 5.08 yuan. China CNR, the second largest, jumped 8.4 percent to 5.56 yuan. China Railway will boost investment in new projects this year to 471.3 billion yuan ($77.4 billion) from a previously planned 416 billion yuan, National Business Daily reported, citing the company. Nine projects will be added, it said.
Kweichow Moutai, China’s biggest liquor maker by market value, rose 2.5 percent to 139.55 yuan. Wuliangye Yibin Co. (000858), the second largest, added 1.5 percent to 16.51 yuan.
Data released Nov. 9 by the National Bureau of Statistics showed industrial production last month exceeded the 10 percent median estimate in a Bloomberg News survey of economists and the previous month’s 10.2 percent. The increase in October’s consumer price index, which compared with the median estimate of 3.3 percent in a Bloomberg survey, was the fastest since February. Producer prices fell 1.5 percent, sliding for 20 straight months, the longest stretch since 2002.
October’s retail sales growth of 13.3 percent compared with the median projection for a 13.4 percent advance. Fixed-asset investment (CNFAYOY) excluding rural households in the first 10 months of the year gained 20.1 percent. The People’s Bank of China will report October money supply, new loans and aggregate financing, its broadest measure of credit, this week.
President Xi Jinping and top Communist leaders tomorrow conclude a four-day gathering to map out an economic blueprint for changes that the State Council’s research institute says should include curbing the government’s role in the economy, adjusting the fiscal system and spurring foreign investment. A communique will be released after the meeting ends.
Easing the one-child policy, changing rural land rights and allowing local governments to issue bonds may be among the reforms, according to Bank of America Corp., while Mizuho Securities Asia Ltd. expects policies to bolster urbanization such as changes to the household registration, or hukou, system, and a rebalancing of fiscal responsibilities between central and local governments.
An index of property stocks in the Shanghai Composite dropped 2.5 percent, the most among five industry groups. Beijing will ban the presale of new homes over 40,000 yuan per square meter by the end of this year, Xinhua reported, citing a meeting held by the city’s commission of housing and urban-rural development. Shanghai raised the minimum down payment after home prices surged 17 percent last month, the biggest gain in the 70 cities the government tracks after Shenzhen and Guangzhou.
China Vanke Co. (000002), the nation’s biggest listed property developer, lost 1.8 percent to 8.71 yuan. Poly Real Estate, the second largest, slid 2.1 percent to 8.95 yuan. Shanghai Waigaoqiao Free Trade Zone Development Co. slumped 9.4 percent to 36.05 yuan, trimming its gain to 275 percent this year.
Options traders are paying the least in two months to protect against drops in Sina Corp. (SINA), owner of China’s Twitter-like Weibo service, on speculation the social media platform will become profitable this year.
Puts protecting against a 10 percent decline in Sina’s shares cost 1.5 points less than calls betting on a rally of the same magnitude last week, one-month data compiled by Bloomberg showed. The price relationship known as skew was the lowest since Sept. 13.
--Zhang Shidong. Editors: Allen Wan, Chan Tien Hin
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at email@example.com