China H-Shares Extend Yesterday’s Rally as Insurers Rise

Chinese stocks trading in Hong Kong gained, extending yesterday’s rally as insurers climbed. Units of China’s two biggest rail companies were suspended from trading after a report they may be merged.

People’s Insurance Company (Group) of China Ltd. gained 3.3 percent, rising for a third day after sliding 5 percent since Aug. 15. China Life Insurance Co. (2628) led gains on the Hang Seng Index after Deutsche Bank AG raised its target price on the stock. Zhuzhou CSR Times Electric Co. jumped 7.7 percent before being suspended. Parent CSR Corp. (1766) is one of the rail companies that halted trading today.

The Hang Seng China Enterprises Index (HSCEI), or H-shares gauge, advanced 0.7 percent to 11,386.38 at the close in Hong Kong, bringing its two-day gain to 3.8 percent. The Hang Seng Index slid 0.1 percent to 25,297.92 amid volume 30 percent more than its 30-day intraday average. Both measures yesterday rose the most since November, with the Hang Seng Index surging to its highest since May 2008, as growth in mainland service industries accelerated and the risk of protests in Hong Kong’s financial district eased.

“After some correction from the recent rally, the market resumed buying interest in anticipation for the Hong Kong-Shanghai stock connect,” said Kenny Tang, general manager of AMTD Financial Planning Ltd. The momentum for H-share gauge is likely to continue for some time, he said.

Shanghai Connection

Investors are awaiting the start of the Hong Kong-Shanghai stock connect program, which will allow a net 23.5 billion yuan ($3.8 billion) of daily purchases between the two cities. It offers a new route for international buyers to access Chinese stocks and for mainland investors to put money into Hong Kong equities.

China Life, the nation’s biggest company in the industry, rose 2.8 percent to HK$23.70. Deutsche increased its price target to HK$27.30 from HK26.30 while maintaining its buy recommendation. Jefferies Group LLC also raised its price target, to HK$26 from HK$25.

PICC Property & Casualty Co. gained 3.3 percent to HK$14.60 after Deutsche boosted its rating to buy from hold, and boosted its price target to HK$17.30 from HK$12.10. Its parent PICC also advanced 3.3 percent. China Telecom Corp. (728) led gains on the H-share gauge, rising 3.8 percent to HK$5.16.

High-Speed Rail

Locomotive manufacturers CSR and China CNR Ltd. were suspended from trading today after Caixin magazine reported on its website that the Chinese government is seeking to merge them to support exports of high-speed railway technologies.

The Hang Seng China Enterprises Index traded at 7.9 times estimated earnings today, compared with 11.6 for the Hang Seng Index and 16.7 for the Standard & Poor’s 500 Index yesterday.

Futures on the S&P 500 (SPX) were little changed today. The underlying gauge slid 0.1 percent yesterday while the Nasdaq Composite Index fell the most in almost a month, dragged down by losses in Apple Inc. after a competitor introduced new smartphones and the company faced criticism for the theft of celebrity photos.

China Hongqiao Group Ltd. (1378) was suspended from trading. The maker of aluminum products is seeking as much as $205 million in a share sale, according to terms for the deal obtained by Bloomberg News.

Dongfeng Motor Group Co., which makes vehicles with Nissan Motor Co., slid 4.3 percent to HK$13.92 after its unit’s August vehicle sales fell from a year earlier.

To contact the reporter on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net

To contact the editors responsible for this story: Sarah McDonald at smcdonald23@bloomberg.net Jim McDonald

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