China’s stocks rose to the highest level in almost three months, led by consumer discretionary and industrial companies.
Cosco Shipping Co. jumped 10 percent as the Baltic Dry Index, a benchmark of commodity shipping rates, surged for a seventh day. SAIC Motor Corp., China’s largest carmaker, rallied 3.2 percent. A private survey showed China’s service industries expanded last month. ZTE Corp. paced gains for phone companies on speculation the government will issue licenses for fourth-generation mobile networks this month.
The Shanghai Composite Index (SHCOMP) gained 1.5 percent to 2,254.84 as of 10:28 a.m., poised for the highest close since Sept. 12. The ChiNext index of small companies rallied 1.6 percent, rising for a second day after plunging by a record on Dec. 2 amid the government’s plan to resume initial public offerings next month.
“There’s fund flow into blue-chip big-caps from smaller companies after the IPO resumption news,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “Big-caps’ low valuations are attractive to investors. The market is also expecting good policies” from this month’s Central Economic Working Conference, where the government may release details on its reform plans, he said.
The Shanghai index is valued at 8.7 times projected 12-month earnings, while the MSCI Emerging Markets Index has a multiple of 10.5, according to data compiled by Bloomberg. Trading volumes in the Shanghai measure were 43 percent above the 30-day average for this time of day, while 100-day volatility fell to the lowest level in a year yesterday, data showed.
The CSI 300 Index advanced 1.3 percent to 2,473.63 today, while the Hang Seng China Enterprises Index (HSCEI) slid 0.3 percent. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York fell 0.4 percent yesterday.
The Shanghai Composite climbed 3.7 percent in November, paring this year’s loss to 0.8 percent, after the government announced the biggest package of policy changes since the 1990s.
“While the overall situation is good, the environment for economic and social development next year is not optimistic,”President Xi Jinping said at a symposium on Nov. 22, according a report from the official Xinhua News Agency yesterday.
Xi’s comments about economic development, which echoed past statements by party officials, may reflect efforts to tamp expectations for growth in 2014. While industrial investment is picking up and the Ministry of Commerce says retail sales will rise more than 13 percent this year, China faces headwinds that include factory overcapacity, excessive corporate debt and slower export demand.
China may set its 2014 gross domestic product growth target at 7 percent, down from 7.5 percent this year, the Economic Information Daily said yesterday, citing research groups. Economists estimate growth in gross domestic product will slow to 7.5 percent next year from 7.6 percent this year, according to the median projection in Bloomberg News surveys last month.
HSBC Holdings Plc and Markit Economics’ services Purchasing Managers’ Index had a reading of 52.5 for last month, compared with 52.6 in October. A number more than 50 indicates an expansion. The official non-manufacturing PMI was 56 last month, compared with 56.3 in October, according to a report yesterday.