China’s stocks rose the most in three weeks, led by financial and commodity companies, on speculation the government will take steps to bolster equities.
Citic Securities Co. and Haitong Securities Co. climbed at least 3 percent after the regulator said it may allow more securities companies to conduct asset-backed securities businesses and China National Radio reported the government is studying allowing the housing provident fund to invest in equities. Jiangxi Copper Co. led gains for metal producers as industrial metals advanced. Yunnan Baiyao Group Co. paced declines among drug companies after a gauge of health-care stocks had the biggest gain among industry groups this year.
“Brokerages will have more innovative businesses to develop and they have good earnings prospects going forward,” Wei Wei, an analyst at West China Securities Co. in Shanghai, said by phone today. “Regulators don’t want to see declines in the stock market and these measures are a signal that they still have cards to play.”
The Shanghai Composite Index climbed 0.9 percent to 2,313.22 at the close, the most since Feb. 1. The measure fell as much 0.1 percent and gained as much as 1.4 percent, with 30-day volatility jumping to the highest level since Jan. 28 at 19.99. Trading volumes were 25 percent lower than the 30-day average, according to data compiled by Bloomberg.
The CSI 300 Index rose 1.1 percent to 2,594.68. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong gained 0.4 percent. The Bloomberg China-US 55 Index added 0.3 percent in New York yesterday.
The Shanghai index traded for 9.5 times projected 12-month earnings yesterday, the lowest level since Dec. 24. The gauge has fallen 3 percent in February, heading for the biggest monthly drop since November. The decline has trimmed a gain during a bull-market rally that started on Dec. 3 to 18 percent.
A gauge of banks, brokerages and developers in the CSI 300 advanced 2.1 percent, the most among 10 industry groups. The measure traded at 7.98 times earnings for the next 12 months yesterday, the lowest since Jan. 11, according to Bloomberg data.
Citic Securities, China’s biggest listed brokerage, advanced 3 percent to 13.95 yuan. Haitong Securities, the second largest, gained 3.5 percent to 11.85 yuan. Poly Real Estate Group Co., China’s second-largest developer by market value, rose 3.9 percent to 12.38 yuan. Industrial Bank Co. climbed 3.6 percent to 18.92 yuan.
The regulator may allow more securities companies to conduct asset-backed securities businesses, according to a statement posted on the regulator’s website yesterday. It may add 100 billion yuan quotas of the renminbi qualified foreign institutional investor program for investors in Taiwan, the Xinhua News Agency reported yesterday. The RQFII program allows offshore yuan to be invested in mainland’s stocks and bonds.
The China Securities Regulatory Commission is studying allowing the housing provident fund to invest in stocks, China National Radio reported yesterday, citing an unidentified CSRC official. The fund’s outstanding balance was 2.1 trillion yuan at the end of 2011.
Jiangxi Copper, the biggest producer of the metal, rose for the first time in five days, adding 1 percent to 23.77 yuan. Industrial metals advanced after new-home sales surged by the most in two decades in the U.S., and Federal Reserve Chairman Ben S. Bernanke defended stimulus measures, raising demand prospects from the second-largest user.
Chinese stocks will resume this year’s rally as the government works to shore up the nation’s economic recovery, according to China Asset Management Co. The firm is the country’s biggest fund manager with 246 billion yuan ($39 billion) of assets, according to fund tracker Howbuy.
Gains this year in Chinese A shares, stock traded in Shanghai and the southern city of Shenzhen, “didn’t fully reflect the gradual economic recovery this year,” David Lai, a portfolio manager at the Hong Kong unit of China Asset Management, said by phone on Feb. 25. “More projects or plans will be rolled out to support short-term growth after the government reshuffle next month.”
New leaders are mulling plans to revamp the central government this week to bolster the economy as it emerges from a seven-quarter slowdown, the official Xinhua News Agency reported Feb. 23. Communist Party chief Xi Jinping is projected to become president during the broadest reshuffle in five years at the National People’s Congress starting March 5.
“Ahead of the meetings in March, the market will fluctuate quite a bit as there’s policy uncertainty,” Zhang Haidong, an analyst at Tebon Securities Co., said by telephone from Shanghai. “There’s still concern about property tightening and the economy isn’t recovering as strongly as we hope it would. Don’t expect any sustained rebound in the near-term.”
A gauge of health-care stocks fell 1.3 percent, the biggest loss among the 10 industry groups. It has surged 16 percent this year, the best performer among the sub-indexes. Yunnan Baiyao lost 0.7 percent to 75.50 yuan. Huadong Medicine Co. dropped 3.8 percent to 37.80 yuan. Kangmei Pharmaceutical Co. slid 3.9 percent to 16.63 yuan.