Most China Stocks Advance; Automakers Gain, Developers Retreat

Most China stocks rose as automakers gained on prospects sales will pick up, countering declines by developers on concern that the government will impose more measures to curb property speculation.

SAIC Motor Corp., the nation’s biggest carmaker, rose to an eight-month high. China Dongfanghong Spacesat Co. climbed 5 percent, leading gains among satellite navigation stocks, after the Shanghai Securities News reported the government will boost industry spending as part of the next 5-year plan. China Vanke Co. and Poly Real Estate Group Co. dropped at least 0.5 percent after BNP Paribas said home prices will decline from this month and StarRock Investment Management said the real-estate property has a “very big bubble.”

“Global and Chinese economies aren’t at a big risk of a double-dip,” said Wang Zheng, chief investment officer at Jingxi Investment Management Co. in Shanghai. “The economic situation has ruled out the possibility of systemic declines facing the stock market.”

Almost five stocks rose for every four that fell on the Shanghai Composite Index, which slipped 0.38, or less than 0.1 percent, to 2,655.39 at the 3 p.m. close. The gauge added 1.7 percent this week, the most since five days through July 30, after domestic manufacturing growth picked up last month and the Federal Reserve pledged to safeguard the recovery. The CSI 300 Index lost 1.19 to 2,920.21.

The Shanghai gauge has rebounded 12 percent from this year’s low on July 5 as investors speculated the government would ease monetary policy to spur growth. That’s trimmed this year’s loss to 19 percent, after the government increased down-payment requirements on home sales and ordered banks to set aside more deposits as reserves to curb asset bubbles.

Auto Sales

SAIC Motor, China’s largest carmaker, led a second day of gains for auto stocks after domestic car sales surged last month. The stock extended yesterday’s 8.9 percent gain, advancing 1.1 percent to 17.69 yuan, the highest since Jan. 15.

Chongqing Changan Automobile Co., the Chinese partner of Ford Motor Co. and Mazda Motor Corp., added 2.5 percent to 11.25 yuan. Sales increased 38 percent in the first eight months, the company said yesterday.

China’s passenger-car sales grew 59 percent in August, more than three times July’s pace, the China Automotive Technology & Research Center said on Sept. 1.

China Dongfanghong jumped 5 percent to 22.74 yuan, the highest since its debut in September 1997. Chengdu GoldTel Electronical Technology Co. advanced 6.9 percent to 78.10 yuan. Beijing BDStar Navigation Co. surged the maximum 10 percent daily cap to 47.87 yuan.

Satellite Navigation

China plans to include the development of the satellite navigation industry in the nation’s next five-year plan, the Shanghai Securities News reported today, without saying where it got the information. The industry will likely grow more than 50 percent a year to a market of more than 400 billion yuan ($58.8 billion) by 2020, it said.

The government is trying to bolster the development of new industries, such as alternative energy and biopharmaceuticals, to offset the slowdown in growth. China’s economic growth slowed to 10.3 percent in the second quarter from 11.9 percent in the first three months of this year.

China doesn’t face the risk of inflation this year, as it did in 2006 and 2008, because the consumer price index is likely to be 3 percent to 4 percent, said Fan Gang, a former central bank adviser, at a forum in Beijing yesterday. The government should “gradually” adjust money supply and slow the rate of growth in the issue of money, he said.

Property Stocks

A gauge of developers fell 1.1 percent in the Shanghai Composite, the most among the five industry groups.

Vanke, the nation’s biggest listed property developer, slipped 0.8 percent to 8.50 yuan even after saying August sales rose 149 percent from a year earlier. Poly Real Estate, the second largest, dropped 0.5 percent to 11.77 yuan. Gemdale Corp., the fourth largest, lost 1.2 percent to 6.48 yuan.

The nation’s home prices will decline from September as the government maintains its lending curbs and increases the supply of public housing, forcing property developers to cut prices to stimulate sales, BNP Paribas said. Property prices rose at the slowest pace in six months in July as the value of sales fell 19.3 percent from a year earlier, according to government data.

The property market is in a “very big bubble” that may last until the government increases interest rates and introduces a real-estate tax, Jiang Hui, investment director at StarRock Investment Management, said at a conference in Shanghai yesterday.

Policy makers in April intensified a crackdown on speculation by enforcing higher down-payment for loans to buy second homes and telling banks to halt mortgages for third homes in areas with “excessive price gains.”

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