China Stocks Rise, Capping Biggest Weekly Gain Since September

China’s stocks rose, with the benchmark stock gauge capping its biggest weekly advance in five months. Consumer companies and drugmakers led gains, while financial shares retreated.

Kweichow Moutai Co. (600519), the biggest maker of baijiu liquor, jumped 5.3 percent, pacing a rally by producers of alcoholic drinks. Shanghai Fosun Pharmaceutical Group Co. surged 4.8 percent. China Citic Bank Corp. slid 1.8 percent, paring this week’s gain to 34 percent, after saying reports about equity cooperation with Alibaba.com Ltd. weren’t true. The benchmark money-market rate had its biggest weekly drop this year as cash returned to banks after the Lunar New Year holidays.

“There’s optimism in the market after last week’s holidays and liquidity is sufficient,” said Zhang Yanbing, analyst at Zheshang Securities Co. in Shanghai. “Citic Bank is dragging financial shares down after its denial.”

The Shanghai Composite Index (SHCOMP) added 0.8 percent to 2,115.85 at the close. The gauge has risen 3.5 percent this week, the most since the week to Sept. 13, as the nation’s trade topped estimates. Data today showed China’s inflation stayed subdued in January while factory-gate prices extended the longest drop since the 1990s.

The CSI 300 (SHSZ300) gained 0.7 percent to 2,295.58. The Hang Seng China Enterprises Index advanced 0.7 percent to 9,943.55. The ChiNext Index, a measure of small-cap companies, climbed 2.1 percent after sinking 3.6 percent yesterday.

The consumer price index rose 2.5 percent from a year earlier, the National Bureau of Statistics said today in Beijing, the same pace as in December. The producer-price index fell 1.6 percent. China’s economic data are distorted in January and February by the shifting timing of the week-long Lunar New Year holiday, which began on Jan. 31 this year.

Trading Volumes

The Shanghai gauge has climbed 6.3 percent since its price-to-earnings ratio fell to a record on Jan. 20, fueled by improving exports. Trading volumes today were 34 percent above the 30-day average. The stock index has lost less than 0.1 percent for the year.

Kweichow Moutai climbed 5.3 percent to 142.90 yuan. Wuliangye Yibin Co. gained 3.3 percent to 15.52 yuan for a sixth day of gains. Consumer staples rose 2.3 percent, the most among 10 industry groups on the CSI 300 index.

“After the Chinese New Year, investors tend to speculate on liquor sales figures, which traditionally tend to surprise on the upside,” said Gerry Alfonso, a trader at Shenyin & Wanguo Securities Co.

Fosun Pharmaceutical gained to 20.08 yuan, a record high. China Resources Sanjiu Medical & Pharmaceutical Co. added 3.3 percent to 25.78 yuan.

Citic Bank

A gauge of financial stocks retreated 0.2 percent. China Citic Bank slid 1.8 percent to 4.86 yuan.

Chinese banks’ bad loans increased for the ninth straight quarter to the highest level since the 2008 financial crisis, highlighting pressures on asset quality and profit growth as the world’s second-largest economy falters.

Non-performing loans rose by 28.5 billion yuan ($4.7 billion) in the last quarter of 2013 to 592.1 billion yuan, the highest since Sept. 2008, the China Banking Regulatory Commission said in a statement on its website yesterday. Bad loans accounted for 1 percent of

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. rose 0.6 percent to a three-week high of 100.54 yesterday.

Ctrip.com International Ltd. (CTRP), China’s biggest online travel agency, led a rally in Chinese companies traded in New York after reporting fourth-quarter profit that beat analysts’ estimates. Competitor ELong Inc. climbed to a one-month high. Vipshop Holdings Ltd. soared to a record while LDK Solar Co., a Jiangxi-based maker of solar wafers, fell the most in two weeks after saying it signed a new forbearance agreement with some holders of its bonds.

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

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

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