U.S.-listed Chinese stocks rose to a two-week high, led by Cnooc Ltd. and Aluminum Corp. of China Ltd., as European leaders acted to contain the region’s debt crisis and investors bet China’s move last week to ease monetary policy will spur growth.
The Bloomberg China-US 55 Index climbed 0.9 percent to 101.2, the highest close since Nov. 16. Cnooc, the nation’s largest offshore oil producer, jumped 3.2 percent to $198.90. Aluminum Corp. of China, the nation’s biggest producer of the metal, gained 3.8 percent to $12.25.
Stocks rallied worldwide after Italian Prime Minister Mario Monti proposed budget cuts and Germany and France pushed for a new European Union treaty to fight the debt crisis before an EU summit on Dec. 9. China’s central bank on Nov. 30 reduced the amount of cash that banks must set aside as reserves for the first time since 2008 to revive growth.
“With the growth outlook stabilizing and improving, it’s time to switch out of defensive sectors into cyclical sectors,” such as industrial and materials stocks, Steven Sun, head of China equity strategy at HSBC Holdings Plc, said in an interview on Bloomberg Television.
The MSCI All Country World Index climbed 0.9 percent, extending an 8.4 percent rally last week. Stocks pared some gains later yesterday after Standard & Poor’s said Germany and France may be stripped of their AAA credit ratings as the debt crisis prompts the ratings company to put 15 euro nations on review for possible downgrade. The Shanghai Composite Index fell 1.2 percent to 2,333.229 while the Hang Seng China Enterprises Index rallied 0.6 percent after a 10 percent rise last week.
Yanzhou Coal Mining
Basic materials stocks were the biggest gainers on the Bloomberg index. Yanzhou Coal Mining Co., China’s fourth-biggest producer of the fuel, rose 3.4 percent to $24.40. The company’s board approved a proposal to sell as much as 15 billion yuan ($2.36 billion) of bonds to boost operating capital and improve its debt structure, it said Dec. 2.
The gain in Aluminum Corp. of China helped trim its losses this year to 46 percent. Goldman Sachs Group Inc. said that aluminum prices don’t have “significant room” for further decline because Chinese producers may cut output and close factories after a 14 percent price slump this year. Goldman estimated Chinese consumption of the metal will rise 12 percent next year.
China’s central bank reduced reserve requirements for major lenders by 50 basis points, or 0.5 percentage point, to 21 percent last week ahead of a report that showed manufacturing contracted for the first time in almost three years. China’s non-manufacturing industries shrank in November for the first time since February, the China Federation of Logistics and Purchasing said on Dec. 3.
Premier Wen Jiabao on Oct. 29 pledged to “fine-tune” economic policies to sustain growth amid a deepening debt crisis in Europe that threatens to trigger a global recession.
Perfect World Co., an online game developer, led gains among Chinese Internet companies, rising 8.6 percent to $11.90. The company, whose shares lost 54 percent this year to Dec. 2, reported third-quarter earnings last month that missed analysts’ forecasts amid rising costs. Sohu.com Inc., owner of the country’s fifth-most visited website, rose 3.2 percent and Baidu Inc., the owner of China’s most popular online search engine, advanced 0.4 percent to $134.63.
Fushi Copperweld Inc., a maker of copper-clad aluminum and steel wire, dropped 6.8 percent, the most in two months, to $6.95. An offer by Li Fu, the company’s chairman and co-chief executive officer, and Abax Global Capital Ltd. to acquire all existing shares at $9.25 apiece was terminated after a special committee of the company’s board failed to confirm the acceptance by the Dec. 2 deadline. The company said in a statement that it will provide additional information for Fu and AGC to evaluate.
The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., gained 1.3 percent to $36.87.
The Shanghai Composite Index is trading at 11 times estimated earnings, compared with 14.4 for Indian stocks, 10.6 for Brazilian shares and 5.3 for Russian equities.
The Chinese yuan fell 0.1 percent to close at 6.3641 per dollar in Shanghai, according to the China Foreign Exchange Trade System. It earlier dropped as much as 0.11 percent to 6.3666 after the People’s Bank of China lowered the daily reference rate by 0.06 percent to 6.3349. The currency is allowed to fluctuate as much as 0.5 percent on either side of the fixing.
The government is scheduled to report November inflation rate and production figures this week. Consumer prices probably increased 4.5 percent last month from a year ago, compared with 5.5 percent in October, according to the median estimate of 33 economists surveyed by Bloomberg. Annual inflation reached a three-year high of 6.5 percent in July.