China’s benchmark stock index rose, led by drugmakers and power producers, as investors bought shares of companies whose earnings may be more resilient in an economic slowdown.
North China Pharmaceutical Co. and Datang International Power Generation Co. led gauges of health-care companies and utlities to the biggest gains among industry groups. Consumer staples producers also advanced as liquor maker Kweichow Moutai Co. jumped 1.8 percent. Citic Securities Co., the biggest listed brokerage, fell to the lowest level in two weeks after the 21st Century Herald said regulators may suspend a plan to allow foreign companies to list in Shanghai.
The Shanghai Composite Index gained 3.4 points, or 0.2 percent, to 2,311.92 at the close, after changing directions at least six times. About 476 stocks fell, 405 rose and 98 were unchanged. The CSI 300 Index slipped 0.2 point to 2,558.84.
“Companies such as drugmakers are more stable in a weak economy because demand is constant,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “Stocks are likely to consolidate in the near term. Economic data to be released this week is going to be weak. Until the government is clearer on its easing policies, shares won’t maintain an uptrend.”
The Shanghai Composite tumbled 2.7 percent yesterday, with its 64.89-point drop matching the date on which Chinese authorities crushed student-led protests on June 4, 1989. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, fell 0.6 percent at the close in New York.
The Shanghai gauge has climbed 5.1 percent this year on optimism the government will ease monetary policy and increase fiscal spending to bolster the economy. The central bank has cut lenders’ reserve-requirement ratios three times since November. Stocks in the measure are valued at 10 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg.
Deutsche Bank AG recommended China’s yuan-denominated shares because of cheap valuations and the prospect of economic stimulus, according to Ajay Kapur, head of Asian equity strategy at the bank.
The nation’s regulators also “want the market to go up,” said Kapur, referring to measures by the government to boost the stock market such as allowing foreign investors to buy more equities.
Gauges tracking drugmakers and utilities rallied 1.9 percent and 1.6 percent, respectively, the most among the CSI 300’s 10 industry groups. The utilities measure has gained 1.4 percent this year, while the drugmakers’ gauge rose 4.6 percent. The CSI 300 has advanced 9.1 percent.
North China Pharmaceutical advanced 4.5 percent to 7.40 yuan. Yunnan Baiyao Group Co., a maker of traditional medicine, advanced 2.9 percent to 53.44 yuan. Datang International Power climbed 4 percent to 5.24 yuan.
China’s consumer prices in May, due to be released on June 9, probably rose 3.2 percent, according to the median of 22 analysts’ forecasts compiled by Bloomberg. That would be the slowest pace in three months. Industrial output gained 9.8 percent for May, from 9.3 percent in April, the economists estimated. That would compare with a more than 11 percent increase in the first quarter.
The nation’s services industry expanded at a faster pace in May, according to a survey of purchasing managers released by HSBC Holdings Plc and Markit Economics. The PMI rose to a 19-month high of 54.7 in May from 54.1 in April, HSBC and Markit said today. The result contradicted a government-backed survey of services businesses released June 3 and signs from other data that a slowdown is deepening.
A measure of consumer-staple producers rose 0.8 percent. Kweichow Moutai gained 1.8 percent to 240.80 yuan.
Citic Securities, the nation’s biggest-listed brokerage, slumped 1.6 percent to 13.13 yuan. Haitong Securities Co. fell 1.3 percent to 10.06 yuan.
The China Securities Regulatory Commission has put on hold the plan for the Shanghai Stock Exchange’s international board as it focuses on introducing an over-the-counter market, the 21st Century Herald reported, citing an unidentified person familiar with the matter. The CSRC did’t immediately respond to a fax by Bloomberg News seeking comment on the report.
Finance ministers and central bank governors from the Group of Seven countries will hold a call today to discuss the European debt crisis. Markets have been bracing for further deterioration in Spain’s banking industry and a possible Greek departure from the 17-member euro area as the region’s leaders wrangle over the details of support for the currency bloc.
Europe is China’s biggest export market, making up about 18 percent of the nation’s overseas shipments, according to Shenyin & Wanguo Securities Co.
China may accelerate policy loosening if Europe’s debt crisis worsens, Dorris Chen, head of China research for BNP Paribas SA, said in a Bloomberg Television interview today.
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., fell 0.3 percent to $32.59.