China’s stocks rose for an eighth day, driving the benchmark index to its longest stretch of gains in almost a year. Technology and financial companies climbed, overshadowing losses by energy producers.
Software maker Neusoft Corp. jumped to a nine-month high on a subsidiary’s plan to buy a stake in a joint venture from Royal Philips Electronics NV. Haitong Securities Co. led a rally for brokerages, climbing 3.5 percent on speculation increased demand for A shares will boost profits. China Coal Energy Co. and Datong Coal Industry Co. declined after a seven-day advance drove valuations to the highest level since November 2011.
The Shanghai Composite Index added 0.1 percent to 2,434.48 at the close, the highest since May 8. The eight-day win streak is the longest since the period ended Feb. 28. The index has risen 24 percent from a three-year low on Dec. 3 on signs economic growth is accelerating.
“Economic fundamentals are sound,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Investors who have missed out on the rally are taking advantage of any dips to jump on to the bull-market run.”
The Shanghai gauge is valued at 13.4 times reported profit, the highest level since September 2011, data compiled by Bloomberg show. Chinese companies traded on the mainland were priced yesterday at the biggest premium to Hong Kong-listed counterparts since Oct. 9, according to an index from Hang Seng Bank Ltd.
The CSI 300 Index gained 0.2 percent to 2,775.84. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong climbed 0.4 percent after plunging 2.8 percent yesterday. The Bloomberg China-US 55 Index fell 0.2 percent in New York yesterday. Hong Kong’s markets will be shut the first three days of next week for the Lunar New Year holiday, while mainland bourses will be closed for the entire week.
The statistics bureau is due release January data on consumer prices and producer prices on Feb. 8. Consumer prices probably rose 2 percent from a year earlier, decelerating from a 2.5 percent gain a month earlier, according to the median estimate of 30 analysts in a Bloomberg survey.
A shares will widen their premium over H shares, spurred by the new government’s economic and stock-market reforms including boosting foreign investor quotas for mainland equities, according to Hao Hong, Hong Kong-based head of China research at Bank of Communications Co.
“With the enlarged QFII and RQFII, the government is making it easier to bet on the A-share market,” Hong said in a phone interview today, referring to the Qualified Foreign Institutional Investors program. Investors should buy A shares over H shares given prospects of supportive measures by the government between now and March, Hong said.
Trading volumes in the Shanghai Composite were 29 percent higher than the 100-day average today, according to Bloomberg data. The 100-day volatility was 17.8, compared with 17.5 over the past year.
Haitong Securities, the country’s second-largest listed brokerage by market value, advanced 3.5 percent to 12.75 yuan. GF Securities Co. gained 5.3 percent to 16.59 yuan.
Brokerages have surged since last week after the Shanghai and Shenzhen stock exchanges expanded to 500 the number of stocks available for margin financing and short selling.
A measure of technology stocks advanced 1 percent today, the second most among the CSI 300’s 10 industry groups. Neusoft surged 3 percent to 8.85 yuan after saying its subsidiary Neusoft Medical plans to buy a stake in a venture from Philips.
The State Council approved an income-distribution plan intended to tackle the nation’s wealth gap. The blueprint targets boosting minimum wages to at least 40 percent of average salaries, loosening controls on lending and deposit rates and increasing spending on education and affordable housing. The plan includes expanding property-tax trials.
The property tax “is indeed a very important way to redistribute from the wealthier to low income families,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. At the same time, “the resistance to this new property tax is furious, so how it will be designed and implemented is a big question mark.”
A gauge of property stocks in the Shanghai index dropped 1.8 percent, the most among the five groups, after the government reiterated plans to expand a property-tax trial as part of income-distribution reform.
China Vanke Co. slid 1.4 percent to 12.16 yuan while Poly Real Estate Group Cop. slumped 2.1 percent to 13.14 yuan.
A gauge of energy stocks slumped 0.9 percent. The sub-index was valued at 15.3 times earnings yesterday, the highest level since Nov. 2011, according to data compiled by Bloomberg.
China Coal, the nation’s second-largest coal producer, fell l.9 percent to 8.20 yuan. Datong Coal, the third biggest, fell 1.3 percent to 10.86 yuan.
The 14-day relative strength measure for the Shanghai index, measuring how rapidly prices have advanced or dropped during a specified time period, was at 75 yesterday. Readings above 70 indicate a price may be poised to fall.