China’s stocks rose as agricultural companies rallied on speculation the government will introduce reforms to boost the industry. Technology shares climbed after falling the second most among 10 sectors in the past month.
Heilongjiang Agriculture Co. and Zhongken Agricultural Resource Development Co. jumped by the daily limit of 10 percent. Leshi Internet Information & Technology (Beijing) Co. surged 8.8 percent to lead gains for the ChiNext index of small-company shares. Industrial Bank Co. and Bank of Beijing Co. slid at least 1 percent as the banking regulator urged lenders to handle credit risks in industries with overcapacity problems.
The Shanghai Composite Index rose 0.4 percent to 2,157.24 at the close, erasing a loss of as much as 1.2 percent. Premier Li Keqiang was cited by the Xinhua News Agency as saying it’s very important to make farmers wealthy and reforms are needed for the development of modern agriculture. Policy makers, planners and government advisers are drafting proposals on how to implement Li’s urbanization vision that will be presented to the Communist Party’s top leaders at a meeting from Saturday.
“Investors seem to be anticipating what sector can receive support in the third plenum,” said Gerry Alfonso, a trader at Shenyin & Wanguo Securities Co. from Shanghai. “The agricultural sector, which is also likely to receive policy support, outperformed.”
The CSI 300 Index advanced 0.1 percent to 2,383.77 today, while the ChiNext rallied 3.1 percent and the Hang Seng China Enterprises Index slid 0.4 percent. The Shanghai index has fallen 4.9 percent this year and trades at 8.5 times projected profits for the next 12 months, lower than the seven-year average of 15.3, according to data compiled by Bloomberg. Trading volumes for the index were 30 percent below the 30-day average, data showed.
Heilongjiang Agriculture jumped 10 percent to 12.87 yuan and Zhongken Agricultural surged 10 percent to 8.27 yuan. farmers wealthy, Xinhua cites Li as saying
Premier Li is encouraging farmers to try various forms and sizes of businesses, Xinhua reported, citing comments made during a visit to farms in the province of Heilongjiang.
A gauge of technology companies in the CSI 300 added 1.7 percent, the biggest advance among 10 industry groups. Neusoft Corp. a software maker, jumped 6.1 percent to 14.09 yuan. The technology measure has fallen 5.9 percent since the start of last month.
Leshi Internet Information, an online video company, led a rally on the ChiNext, jumping 8.8 percent to 38.60 yuan. Huayi Brothers Media Corp. advanced 6.5 percent to 24.10 yuan.
“There’s bargain hunting after some blue-chip stocks and small caps had fallen too much,” said Deng Wenyuan, an analyst at Soochow Securities Co. “Investors are also eyeing companies they think will benefit from reforms announced from this week. With a lack of volume, the market’s gains are capped.”
A measure of financial stocks including banks and developers in the CSI 300 fell 0.5 percent, the biggest loss among industry groups. Industrial Bank dropped 2 percent to 11.49 yuan. Bank of Beijing declined 1.1 percent to 7.87 yuan.
Banks will be asked to support a reduction in overcapacity, Shang Fulin, chairman of the China Banking Regulatory Commission, said yesterday at a meeting, according to his speech posted on the regulator’s website.
China’s top four banks posted their biggest increase in soured loans since at least 2010 as a five-year credit spree left companies with excess manufacturing capacity and slower profit growth amid a cooling economy. The rise in defaults adds to concern bank profitability may slip as policy makers trim output at cement plants to paper makers that have gorged on credit since 2008, while urging lenders to build buffers to cover loan losses.
HSBC Holdings Plc and Markit Economics released their services Purchasing Managers’ Index for October. The index rose to 52.6 from 52.4 in September. A number more than 50 indicates an expansion. The official non-manufacturing PMI rose to 56.3 from 55.4 in September, according to a Nov. 3 report.