China’s stocks rose, capping a second week of gains for the benchmark index, as falling U.S. jobless claims bolstered the outlook for exports and publishing companies jumped after Mo Yan won the Nobel Prize in Literature.
China Construction Bank Corp., the nation’s second-largest lender by assets, led banks higher after officials at the top four lenders said they are resisting government pressure to lower borrowing costs to maintain the profitability of lending operations. Shanghai Xinhua Media Co. surged by 10 percent on speculation Mo’s award will spur book sales. Jiangxi Copper Co. paced a decline for metal producers after copper prices slipped in London and a Bloomberg survey showed traders are the most bearish in four months on concern metals demand will weaken.
“The U.S. economy is doing better and psychologically, it creates positive sentiment for investors here, who believe the global economy is improving,” said Zhang Gang, a strategist at Central China Securities Holdings Co. in Shanghai.
The Shanghai Composite Index rose 0.1 percent to 2,104.93 at the close, adding to this week’s gain of 0.9 percent. The index changed directions at least 16 times. The CSI 300 Index climbed 0.1 percent to 2,304.53, led by financial companies. The Shanghai index has fallen 4.3 percent this year on concern the government isn’t loosening monetary policy or introducing stimulus policies fast enough to counter the slowdown in the economy. The gauge is valued at 9.8 times estimated earnings, compared with the 17.8 average since Bloomberg began compiling the weekly data in 2006.
First-time applications for U.S. jobless benefits dropped 30,000 to 339,000 last week, the fewest since February 2008, Labor Department figures showed yesterday. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey. One state accounted for most of the plunge in claims, a Labor Department spokesman said.
The U.S. and Europe are China’s two biggest export markets, making up about 35 percent of the nation’s overseas shipments, according to Shenyin & Wanguo Securities Co.
China Shipping Development Co. climbed 0.9 percent to 4.1 yuan. China Cosco Holdings Co. advanced 1.9 percent to 4.33 yuan. Charter rates for capesizes have risen 50 percent from lows in mid-September because of increasing demand and customers having to pay more to persuade shipowners to take vessels out of lay-up, Deutsche Bank AG analysts Joe Liew and Sky Hong wrote in a note yesterday. China Shipping and China Cosco are the nation’s biggest operators of dry-bulk ships.
Data next will show China’s economy probably grew at a 7.7 percent pace in the third quarter, while exports rose 5.5 percent in September and inflation accelerated to 1.9 percent, according to economists’ estimates compiled by Bloomberg. The trade data is scheduled to be released Oct. 13, while the inflation report will come out two days later. The GDP data is slated for Oct. 18.
After the market close, the People’s Bank of China said in a statement China’s new local-currency lending was 623.2 billion yuan last month. The median estimate of 32 economists in a Bloomberg News survey was for loans of 700 billion yuan.
The Shanghai measure’s 30-day volatility reading was at 20.4, compared with this year’s average of 16.5. About 7.5 billion shares changed hands in the gauge yesterday, about 4 percent lower than the daily average this year.
Jiangxi Copper, the largest copper producer, lost 0.8 percent to 22.04 yuan today. Yunnan Copper Industry Co. retreated 0.4 percent to 16.52 yuan. Copper fell 0.4 percent in London trading.
Fourteen analysts surveyed by Bloomberg said they expect prices to drop next week and seven were bullish. A further 10 were neutral, making the proportion of bears the highest since June 1. Copper supply will outpace demand by 458,000 metric tons in 2013, the first glut in four years and the biggest in more than a decade, according to the Lisbon-based International Copper Study Group, whose members include 23 nations.
Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, advanced 0.5 percent to 3.84 yuan. China Construction Bank jumped 1.7 percent to 4.14 yuan.
China’s biggest banks are limiting discounts for their best corporate clients to 10 percent of the benchmark lending rate, the officials said, asking not to be identified as they’re not authorized to speak publicly. The central bank in July began allowing lenders to offer credit at 30 percent less than the benchmark rates.
Keeping borrowing costs high may blunt efforts to revive growth that has decelerated for six straight quarters in the world’s second-largest economy.
The central bank has kept the reserve-requirement ratio unchanged at 20 percent since a second reduction this year in May and has relied on reverse repurchase contracts to inject capital into the financial system. Yesterday, it kept the yield on seven-day reverse repos unchanged at 3.35 percent for a sixth sale, higher than the one-year deposit rate of 3 percent.
“The central bank’s action of keeping seven-day reverse repo rate higher than the one-year deposit rate is sending a clear signal that it’s not necessary to further lower benchmark interest rates,” said Zou Yu, head of fixed income in Shanghai at Asset Management Co., which oversees 29.7 billion yuan ($4.7 billion) of assets.
Shanghai Xinhua Media Co. surged 10 percent to 6.23 yuan, the daily maximum, on speculation author Mo Yan’s Nobel Prize win would boost book sales. Time Publishing and Media Co. added 4.9 percent to 11.05 yuan and Changjiang Publishing and Media Co. soared 6.3 percent to 7.43 yuan.
Mo won the 2012 Nobel Prize in Literature for blending folk tales, history and contemporary life with “hallucinatory realism,” the Swedish Academy said.
-- Editor: Allen Wan