Chinese Stocks Advance on Home Prices, Manufacturing

Most Chinese stocks rose after the nation’s home prices advanced for the first time in 10 months and manufacturing indicators beat forecasts.

Poly Real Estate Group Co., the nation’s second-biggest property developer, surged 2.3 percent as data showed home prices across 100 cities increased in June. Aluminum Corp. of China Ltd. paced an advance for material stocks as speculation Europe’s debt crisis is easing bolstered the outlook for commodities demand. SAIC Motor Corp., the biggest Chinese automaker, slid 8.5 percent after the Guangzhou Daily reported that Guangzhou city will cap the number of new car purchases.

Six stocks gained for every two that declined on the Shanghai Composite Index, which rose less than 0.1 percent to 2,226.11 at the close. The CSI 300 Index added 0.2 percent to 2,465.24. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, jumped 2.9 percent in New York on June 29.

China’s manufacturing “data was better than expected and there seemed to be some resolution in Europe,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “Still, investors are quite concerned about the economy.”

The Shanghai index plunged 6.2 percent in June, the most in Asia, on concern the government isn’t loosening monetary policy quick enough to stem a slowdown even as the central bank cut interest rates for the first time since 2008. Stocks in the measure are valued at 9.73 times estimated earnings, compared with the average of 17.6 since Bloomberg began compiling the data in 2006.

Manufacturing Outlook

China’s Purchasing Managers’ Index fell to 50.2 in June from 50.4 in May, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing reported yesterday. That compares with the 49.9 median estimate in survey of 24 economists. A final PMI reading for June by HSBC Holdings Plc and Markit Economics today was better than a preliminary level published last month.

The manufacturing data should provide relief to investors concerned about a “freefall” in the economy, according to Barclays Plc. The government’s efforts to stabilize growth are starting to take effect and growth will bottom in the second quarter and start improving from June, Jian Chang, Yiping Huang and Lingxiu Yang, analysts at Barclays, said in a report.

Aluminum Corp. of China, the largest aluminum producer, climbed 0.7 percent to 6.21 yuan. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., China’s biggest producer of rare earth, jumped for a second day, rising 3.7 percent to 40.90 yuan.

Home Prices Rebound

China’s new home prices rose for the first time in 10 months as the government eased its monetary policies to bolster the economy, according to SouFun Holdings Ltd., the nation’s biggest real estate website owner.

Home prices increased 0.1 percent from May to 8,688 yuan ($1,367) per square meter, SouFun said in an e-mailed statement today, based on its survey of 100 cities. Beijing led gains among the nation’s 10 biggest cities, climbing 2.3 percent from May, followed by Shenzhen, which added 0.8 percent.

Poly Real Estate rose 2.3 percent to 11.60 yuan. China Vanke Co., the largest property developer, increased 0.8 percent to 8.98 yuan. Gemdale Corp. climbed 2.6 percent to 6.65 yuan.

SAIC retreated 8.5 percent to 13.08 yuan, the biggest drop since Nov. 12, 2010. Great Wall Motor Co. lost 7.4 percent to 16.48 yuan. Guangzhou plans to limit the number of new passenger vehicles to ease congestion, the Guangzhou Daily reported. The one-year trial, which takes effect today, will cap the number of new cars at 120,000, the paper said, citing a government notice.

European Outlook

Chinese stocks traded in the U.S. posted the biggest monthly gain since February as European leaders agreed to ease the region’s debt crisis.

Leaders of the European Union, where China sends about 20 percent of its overseas sales, dropped requirements that taxpayers get preferred creditor status on aid to Spain’s banks and opened the way to recapitalize lenders directly.

“Expectations were low before the leaders’ meeting and any type of deal that was negotiated would have been a positive surprise,” Timothy Ghriskey, chief investment officer at New York-based Solaris Group, which manages about $2 billion in assets, said in a phone interview on June 29.

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., soared 3.6 percent on June 29, taking its advance last month to 0.5 percent.

-- Editors: Allen Wan, Darren Boey

Before it's here, it's on the Bloomberg Terminal. LEARN MORE