Most China stocks rose as health-care and consumer companies gained on recommendations by Shenyin & Wanguo Securities Co. and China International Capital Corp. Developers extended yesterday’s plunge on new loan curbs.
Zhejiang Hisun Pharmaceutical Co. jumped the 10 percent daily limit. Beijing Yanjing Brewery Co., China’s third-biggest brewer, surged the most since September 2008 after net income gained. China Vanke Co., the biggest listed property developer, and Gemdale Corp. dropped more 3 percent as the government stepped up measures to limit property speculation.
“The market is turning a bit more defensive and investors are switching to pharmaceutical and consumer stocks,” said Zhao Zifeng, who helps oversee about $10.2 billion at China International Fund Management Co. in Shanghai. “Investors are worried about the potential slowdown in the economy because of the crackdown on the property market.”
About two stocks rose for each one that fell on the Shanghai Composite Index, which lost 0.76 point, or less than 0.1 percent, to 2,979.53 at the close. The CSI 300 Index slid 0.1 percent to 3,173.37. Futures on the CSI 300 expiring in May, the most active contract, added 0.5 percent to 3,216.6.
The Shanghai index slumped 4.8 percent yesterday, the most in eight months, on concern a government crackdown on the property market will increase bad loans and damp consumer spending. It has dropped 9.1 percent this year, the world’s third-worst performer, as the government unwound monetary stimulus to avert asset-price bubbles after banks extended record credit last year.
Zhejiang Hisun Pharmaceutical surged 10 percent to 27.57 yuan. Harbin Pharmaceutical Group Co. jumped 8 percent to 21.97 yuan, the most since November 2008. Yunnan Baiyao Group Co., a manufacturer of traditional Chinese medicines, added 4.9 percent to 63.33 yuan.
Shenyin & Wanguo Securities analysts led by Zhu Anping recommended in a report today that investors buy consumer-related shares in industries such as pharmaceuticals, food and apparel and avoid stocks related to the property industry.
Jiangsu Yanghe Brewery Joint-Stock Co. gained 8.2 percent to 146.87 yuan, an 11th day of gains, while Yanjing Brewery, China’s third-biggest beermaker, added 8.3 percent to 22.80 yuan after saying first-quarter profit rose 27 percent.
CICC said health-care and consumer-related stocks are likely to outperform as property and banks “remain under pressure” due to policies to tackle rising home prices.
China ordered developers today not to take deposits for sales of uncompleted apartments without proper approval and barred them from charging “abnormally high” prices, stepping up efforts to prevent a property bubble.
“The tightening measures will affect market sentiment in the short term,” said CICC analysts Gao Ting and Wang Hanfeng, in a report today. “In the longer term, curbing home prices may increase the ability of the people to spend in other areas.”
Vanke dropped 3.3 percent to 8.03 yuan, extending yesterday’s 8.2 percent tumble. Gemdale, the fourth-largest developer by market value, lost 3.4 percent to 11.22 yuan, the lowest since May 11. China Merchants Property Development Co. fell 5.8 percent to 18.01 yuan.
China in the last week has announced measures to damp real estate prices including banning banks from financing purchases of third homes and higher down payments and rates for second homes. Prices in 70 major cities rose by a record 11.7 percent in March.
A gauge tracking developers listed on the Shanghai Composite slipped 2.2 percent, declining for a fifth day. That’s its longest stretch of losses since a six-day drop in December 2008. The measure trades at 22.8 times reported earnings, the lowest since March 2009, according to data compiled by Bloomberg.
China Asset Management Co., the nation’s biggest mutual fund company, bought developers in its flagship fund in the first quarter, predicting “gentle” tightening this year, according to the company’s Web site.
Wang Yawei cut the proportion of equities in his China AMC Large-Cap Select Fund, the best-performing China-based fund over the past five years, to 88.6 percent as of March 31, compared with 93 percent in the preceding quarter. He sold manufacturers as speculation increased that China may revalue its currency.
Chinese property stocks are becoming “more attractive” after government curbs on bank lending drove valuations to a year-low and made interest rate increases less likely, Martin Currie said.
The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.
China Eastern Airlines Corp. (600115 CH), the nation’s second-largest carrier, advanced 4.6 percent to 8.92 yuan after saying first-quarter profit jumped 19-fold.
China Shipbuilding Industry Co. (601989 CH), the nation’s largest maker of vessel equipment, added 1.5 percent to 6.80 yuan after saying first-quarter net income rose 7.3 percent to 315.9 million yuan. The company’s 2009 annual net income rose 22 percent to 1.5 billion yuan, it said.
Datang International Power Generation Co. (601991 CH), China’s second-biggest electricity producer, slid 3.7 percent to 7.89 yuan, the most since June 18. Its 2009 net income rose to 1.6 billion yuan. That was below the median estimate of 1.7 billion yuan in a Bloomberg survey of nine analysts.
Ping An Insurance (Group) Co. (601318 CH), China’s second-biggest insurer, rose 2.9 percent to 50.62 yuan after President Louis Cheng forecast “stable” profit this year.