China’s stocks rose for the third time in four days after slowing growth in imports and exports fueled speculation the government will take steps to bolster the world’s second-biggest economy.
The Shanghai Composite Index advanced 20.09 points, or 0.9 percent, to 2,305.86 at the close, reversing a loss of as much as 1.2 percent in the last hour of trading as some investors said measures may be introduced at tomorrow’s regular meeting of the State Council, or cabinet. China Construction Bank Corp. and Poly Real Estate Group Co. climbed at least 1.5 percent, leading gains for lenders and property developers.
“There’s speculation that the central government will have a meeting to review the economy in the first quarter and may fine-tune policies to spur growth,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages about $120 million.
The CSI 300 Index added 1 percent to 2,519.79 today. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, retreated 1.1 percent in New York yesterday.
The Shanghai index has gained 4.8 percent this year on speculation the government will cut lenders’ reserve requirements and possibly interest rates to boost the economy. Stocks in the gauge are valued at 9.7 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg.
Thirty-day volatility in the Shanghai Composite was at 17.8 today, the lowest level this month. About 6 billion shares changed hands in the gauge yesterday, 31 percent lower than the daily average this year.
Equities fell earlier today after a customs bureau report showed the nation’s inbound shipments increased 5.3 percent in March, below the 9 percent median estimate in a Bloomberg News survey and the 39.6 percent jump in February. Exports rose 8.9 percent from a year earlier, more than economists’ forecast, leaving a trade surplus of $5.35 billion, compared with a median projection for a $3.15 billion trade deficit. Overseas shipments jumped 18.4 percent in February.
Slowing import growth “suggests that domestic demand is weakening and may revive hard-landing concerns,” Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole SA, said in a report. “It is also likely to convince policy makers to ease monetary policy to stimulate the domestic segment of the economy.” He expects a cut in interest rates or lenders’ reserve-requirement ratios in April even as a report yesterday showed inflation quickened in March.
The statistics bureau is due to report the nation’s first-quarter gross domestic product and other March data including industrial production on April 13. The economy probably grew 8.4 percent in the first three months of the year, according to the median estimate of 38 economists surveyed by Bloomberg. The economy expanded 8.9 percent in the fourth quarter of 2011, the least in 10 quarters.
China plans to release fine-tuning measures “soon,” Premier Wen Jiabao said on April 3, according to China National Radio.
Construction Bank, the country’s second-largest bank, rose 1.5 percent to 4.74 yuan. Huaxia Bank Co., partly owned by Deutsche Bank AG, climbed 3.2 percent to 10.93 yuan. China Citic Bank Corp., the banking unit of the nation’s largest investment company, advanced 2.6 percent to 4.30 yuan.
Mizuho Securities Co. recommended investors buy banking stocks after Central Huijin Investment Ltd., the state-backed shareholder in China’s biggest banks, raised its stakes in some of the nation’s biggest lenders. Huijin move is significant as it supports big banks in same week Wen called for breakup of “monopoly,” Mizuho said.
Poly Real Estate, China’s second-largest developer by market value, gained 3.3 percent to 11.66 yuan after contracted sales jumped 47 percent in March. China Vanke Co., the biggest, rose 2.4 percent to 8.42 yuan. China Merchants Property Development Co. added 1.5 percent to 21.20 yuan.
“It’s time to buy property developer shares,” Dorris Chen, head of China research at BNP Paribas SA, said in an interview at Bloomberg’s offices in Shanghai today. “They are raising funds. There is a possibility the larger companies will acquire smaller developers.”
Chen’s comments came after the Securities Times reported Hangzhou Glory Real Estate became the first developer to file for bankruptcy on cash-flow issues since China imposed real estate curbs.
A measure of consumer discretionary stocks in the CSI 300 gained 1.4 percent, the biggest advance among the 10 industry groups. SAIC Motor Corp., China’s largest carmaker, rose 2.1 percent to 14.95 yuan after sales increased 10 percent in March. Chongqing Changan Automobile Co., the Chinese partner of Ford Motor Co. and Mazda Motor Corp., advanced 2.6 percent to 4.70 yuan.