China’s stocks rose the most in two weeks, led by property developers and financial companies, after the benchmark index traded at its biggest discount to global markets in more than three years.
A gauge of real-estate companies posted its biggest gain in a month, with China Vanke Co. and Poly Real Estate Group Co. advancing at least 4.3 percent. Haitong Securities Co., the nation’s second-biggest listed brokerage, jumped 3.7 percent. Chengdu Dr Peng Telecom & Media Group Co. and Sanan Optoelectronics Co. led a rally for phone and technology stocks.
The Shanghai Composite Index rose 1.2 percent to 2,251.81 at the close, paring its drop this year to 0.8 percent. The measure traded at 11.9 times reported earnings yesterday, compared with the MSCI All-Country World Index’s 16.8 multiple. That’s the biggest gap since December 2009. A report today showed foreign investment trailed analysts’ estimates.
“Investors feel stocks may be near a bottom and the economic data has been slowly digested,” Zhang Haidong, an analyst at Tebon Securities Co., said by phone from Shanghai. “China is an attractive market because of our relatively cheap valuations. Brokerages are leading stock gains today and we expect their earnings to be better than last year.”
The Shanghai measure has lost 7.5 percent from this year’s Feb. 6 peak amid concern the slowing economy will curb profits. Trading volumes on the index were 29 percent higher than the 30-day average for this time of day.
The CSI 300 Index rose 1.8 percent to 2,552.71 today. The Hang Seng China Enterprises Index slid 0.4 percent. The Bloomberg China-US Equity Index climbed 0.1 percent yesterday.
Foreign direct investment in China lagged behind analysts’ estimates in April, highlighting concern at the growth outlook for the world’s second-biggest economy. Investment rose 0.4 percent from a year earlier, the Ministry of Commerce said today, less than the 5.7 percent gain in March and the 6.2 percent median estimate in a Bloomberg News survey of analysts.
This week, Bank of America Corp. and JPMorgan Chase & Co. lowered 2013 growth estimates to 7.6 percent after April industrial production and fixed-asset investment trailed forecasts, while Premier Li Keqiang signaled policy makers are reluctant to use stimulus to counter the slowdown.
Chinese stocks are “stuck in a trading range,” JPMorgan Chase analysts led by Sunil Garg wrote in report dated yesterday. “Upside appears capped by growth deceleration and policy headwinds, while ‘cheap’ headline valuations drive periodic bargain hunting.”
The Shanghai Stock Exchange Property Index rose for the first time in four days. It trades at 7 times estimated earnings, compared with the three-year average of 9.5. Vanke, the biggest developer, rallied 5.1 percent to 11.70 yuan. Poly Real Estate, the second largest, advanced 4.3 percent to 12.07 yuan. Gemdale climbed 5.2 percent to 7.45 yuan.
Among brokerages, Haitong Securities advanced 3.7 percent to 11.03 yuan. Sealand Securities rallied 5 percent to 13.05 yuan. Hong Yuan Securities Co. rose 6.9 percent to 23.15 yuan, its highest close since November 2010.
Gauge tracking telecom and technology shares climbed 3.6 percent and 1.4 percent, respectively. Chengdu Dr Peng jumped 8.7 percent, adding to a 7-day, 47 percent gain. Sanan Optoelectronics added 6.7 percent to 18.06 yuan. NavInfo Co. jumped 4.1 percent to 12.48 yuan.
“Telecom and technology shares are the ones gaining because investors re-directed their attention into small-cap stocks with growth potential,” Zhou Lin, an analyst at Huatai Securities Co., said by phone from Nanjing. “The index isn’t going to do well in the near term as investors have been disappointed economic growth didn’t meet expectations and the economic weakness could extend into the third quarter.”
Chinese equities rose in New York as Youku Tudou Inc. rallied on speculation first-quarter sales will exceed the company’s forecast. Suntech Power Holdings Co. jumped 11 percent and Phoenix New Media Ltd. advanced to a five-week high. Online retailer Vipshop Holdings Ltd. fell 5 percent.
China’s first cross-border exchange-traded fund tracking the Nasdaq 100 Index started trading on the Shanghai Stock Exchange yesterday, becoming the first ETF in China to allow investors access to the U.S. market. The ETF traded 87.7 million shares on the first day out of a total 267 million outstanding shares, according to John Jacobs, executive vice president at Nasdaq OMX Group Inc.