China’s benchmark stock index rose from its lowest level since 2009 as the outlook for China’s manufacturing improved and property developers rallied.
China Vanke Co. and Poly Real Estate Group Co. advanced at least 1.3 percent after the China News Service said Nanjing city plans to offer loan support for first-home purchases. Kweichow Moutai Co. rallied 2.8 percent after Haitong Securities Co. said major liquor makers’ first-half profit may rise as much as 60 percent. A private survey released today by HSBC Holdings Plc and Markit Economics signaled the nation’s manufacturing may contract at a slower pace in July.
The Shanghai Composite Index rose 0.2 percent to 2,146.59 at the close, erasing an earlier loss of as much as 0.5 percent. The CSI 300 Index added 0.5 percent to 2,375.99. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, slid 2.1 percent in New York yesterday.
“The downtrend on the economy isn’t over yet and earnings may surprise investors on the downside,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “But the government may announce measures to boost growth at any time. Given the recent decline and the policy outlook, a further big drop isn’t very likely.”
The Shanghai Composite has fallen 13 percent from this year’s high on March 2 amid concern an economic slowdown is deepening. It’s valued at 9.6 times estimated profit, compared with the average of 17.5 since Bloomberg began compiling the data in 2006. Shares worth 48.1 billion yuan ($7.54 billion) changed hands in the index yesterday, the lowest since June 27.
The July preliminary reading of 49.5 for the purchasing managers’ index, if confirmed, would be the highest since February. In June, the final number was 48.2. A final reading below 50 would also cap a nine-month run, the longest in the index’s eight-year history and surpassing the stretch from August 2008 to March 2009.
A measure of property stocks in the Shanghai Composite added 1.1 percent today, the most among the five industry group. Vanke, the nation’s biggest listed property developer, gained 1.3 percent to 9.33 yuan. Poly Real Estate, the second largest, advanced 2.1 percent to 11.44 yuan. China Merchants Property Development Co., the third biggest, climbed 3.4 percent to 23.59 yuan.
Nanjing proposed yesterday to promote the property market by offering housing provident fund loans to first-time homebuyers and subsidizing purchases by so-called qualified professionals, China News Service reported yesterday after a press conference by the local government.
Nanjing isn’t easing home purchase restrictions, according to a statement posted on the city’s party committee propaganda department’s microblog. The city will support qualified first-home purchasers to buy homes, the statement said.
The State Council plans to send six teams to inspect the property markets and lending in 12 provinces as authorities are “highly concerned” about potential risk, the Shanghai Securities News reported today, without saying where it got the information.
Kweichow Moutai, China’s biggest producer of baijiu liquor by market value, led a measure of consumer-staples stocks to the biggest gain among the CSI 300’s 10 industry groups. The stock rose 2.8 percent to 249.38 yuan.
Wuliangye Yibin, the second biggest, added 0.7 percent to 35.83 yuan. Luzhou Laojiao Co., a sprits producer in southwest province of Sichuan, climbed 1.9 percent to 41.48 yuan.
Kweichow Moutai, Wuliangye and Luzhou Laojiao may report between 40 percent and 60 percent increases in first-half profit, Qi Ying, an analyst at Haitong Securities, wrote in a report today.
In Europe, Spain’s 10-year bond yields surged to a euro-era high yesterday on bets more of the nation’s regions will ask for bailouts. After the market closed, Moody’s Investors Service said it cut Germany, the Netherlands’ and Luxembourg’s Aaa credit rating outlooks to negative, citing “rising uncertainty” about Europe’s debt crisis.
Risks that Greece may exit the 17-nation euro currency and “increasing likelihood” of collective support for European countries such as Spain and Italy were among reasons for the change, Moody’s said yesterday. Europe is China’s largest export market, making up 18 percent of the nation’s overseas sales, according to Shenyin & Wanguo Securities Co.
China Petroleum & Chemical Corp., Asia’s biggest oil refiner, also known as Sinopec, rose 0.8 percent to 6.07 yuan.
Parent China Petrochemical Corp. agreed to spend $1.5 billion for a 49 percent stake in Calgary-based Talisman Energy Inc.’s U.K. unit. The purchase was the second announced yesterday involving a Chinese buyer and a Canadian energy producer. Hong Kong-listed Cnooc Ltd. agreed to pay $15.1 billion in cash to acquire Calgary-based Nexen Inc.