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China’s Stock-Index Futures Rise After Growth Target Unchanged

China’s stock-index futures rose after the government kept its economic growth target unchanged for this year.

Futures on the CSI 300 Index (SHSZ300) expiring in March gained 0.7 percent to 2,179.60 as of 9:15 a.m. China retained a target for 7.5 percent economic growth, maintaining a pace of expansion close to last year’s 7.7 percent that will help to sustain demand for oil and iron ore and support a global economy that’s forecast by the International Monetary Fund to accelerate.

“The 7.5 percent GDP target is a massive signal to the market,” said Gerry Alfonso, a trader at Shenyin & Wanguo Securities Co. “After all the speculation that the target could be lowered to 7 percent, the premier’s statement is clearly a warning against complacency.”

The Shanghai Composite Index (SHCOMP) dropped 0.2 percent to 2,071.47 yesterday. The CSI 300 Index declined 0.3 percent. The Hang Seng China Enterprises Index (HSCEI) gained 0.3 percent. The Bloomberg China-US Equity Index added 2.1 percent in New York.

The economic target was given in a work report that Premier Li Keqiang will deliver to the annual meeting of the legislature today in Beijing. Li said the nation needs stable growth to ensure jobs. The inflation target is 3.5 percent.

The MSCI Asia Pacific Index gained 0.9 percent today on sign the Ukraine crisis won’t immediately escalate. Russian President Vladimir Putin said yesterday that he’s not considering taking control of the Black Sea region of Crimea and would send troops into Ukraine only in extreme circumstances.

Vanke Sales

The Shanghai Composite is valued at 7.9 times 12-month projected earnings, compared with the five-year average multiple of 12.2, according to data compiled by Bloomberg. Trading volumes in the index were 11 percent above the 30-day average yesterday, according to data compiled by Bloomberg.

China Vanke Co. (000002), the nation’s biggest listed property developer, may gain. The company said sales increased 30 percent in February.

Everbright Securities Co. may move. The brokerage said it received a fine of 4.3 million yuan and had 2.15 million yuan of assets seized from the China Securities Regulatory Commission because of inadequate due diligence related to an initial public offering.

A Chinese solar company warned it may not be able to make an 89.8 million yuan ($14.6 million) interest payment in full by the March 7 deadline, in what may be the first default of an onshore bond.

Default Concern

Shanghai Chaori Solar Energy Science & Technology Co., a maker of cells to convert sunlight into power, plans to pay 4 million yuan to bondholders, the company said in a statement to the Shenzhen stock exchange yesterday.

A default would stoke new concern about strains in China’s financial system after a high-yield trust product issued by China Credit Trust Co. was bailed out in January. It would also add to signs that industries with overcapacity, such as solar, steel and shipbuilding, are struggling under the weight of higher borrowing costs.

Wang Penghui became China’s top-ranked stock picker by doing what billionaire investor Bill Gross says can’t be done: predict where the world’s second-largest economy is heading.

The manager of the $1.6 billion Invesco Great Wall Domestic Demand Growth Fund has produced the best risk-adjusted returns among 48 Chinese rivals in the BLOOMBERG RISKLESS RETURN RANKING since August 2009. He sidestepped a 40 percent tumble in the Shanghai Composite by shifting into technology and consumer stocks from the banks and commodity producers that have been hurt most by the nation’s economic slowdown.

“China has encountered a bottleneck of the old growth model and we need to walk out,” Wang said in an interview from Shenzhen, where Chinese leader Deng Xiaoping’s early experiments with capitalism began more than three decades ago. “That’s why we selected industries like technology. They’re necessary for China to transform the structure of its economy.”

Chinese stocks in the U.S. rebounded yesterday as Vipshop Holdings Ltd. (VIPS), the online fashion retailer that surged 25-fold since its New York debut, rallied to a record after its revenue forecast exceeded analyst estimates.

To contact the editors responsible for this story: Michael Patterson at Allen Wan, Richard Frost

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