China’s stocks climbed for the first time in five days as brokerages led gains among financial companies, while rising tensions over a new air defense zone spurred an advance for defense-related companies.
Sinolink Securities Co. and Sealand Securities Co. surged more than 7 percent. Guangzhou Hi-Target Navigation Tech Co. jumped 10 percent after two American B-52 bombers flew through disputed areas of the East China Sea covered by China’s defense zone. Trainmakers China CNR Corp. and CSR Corp. advanced at least 1.6 percent after the official Xinhua News Agency reported China will build a railway linking Hungary and Serbia.
The Shanghai Composite Index rose 0.8 percent to 2,201.07 at the close. The gauge swung between gains and losses before jumping as much as 1.1 percent in the final half hour of the morning session. Citigroup Inc. said brokerages are positioned to gain next year from developments in capital markets.
“There are lots of good expectations about reform and innovation measures going on within the brokerage industry so investors expect they will be major beneficiaries from the development of the capital market,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co., which oversees $120 million.
The CSI 300 Index rose 1.1 percent to 2,414.48. The Hang Seng China Enterprises Index climbed 0.7 percent. The Bloomberg China-US Equity Index added 0.8 percent in New York yesterday.
The Shanghai Composite has risen 2.8 percent this month as the government announced the largest package of economic reforms since the 1990s after a top-level Communist Party meeting. The Central Work Economic Conference, which sets the tone for policies, will start next week and “investors anticipate some good policies to come from it,” Wang said.
Sinolink Securities gained 10 percent to 17.69 yuan. Sealand Securities advanced 7.8 percent to 11.55 yuan. Citic Securities Co., China’s biggest listed brokerage, added 3.1 percent to 12.91 yuan. Haitong Securities Co., the second largest, added 3.4 percent to 11.73 yuan.
China’s reform outlines reiterated accelerated development in capital markets, which would be structurally positive for brokers in the long term, Citigroup said in a report dated yesterday, naming Haitong Securities as a top pick.
The government will scrap approvals of overseas investors to buy mainland stocks when the time is right, according to a transcript of a speech by People’s Bank of China Governor Zhou Xiaochuan at a forum yesterday that was posted on the central bank’s website.
The Shanghai index may climb about 28 percent to 2,805 next year, outperforming the H-share index and the MSCI China Index, Citigroup analysts led by Minggao Shen wrote in the report.
The Shanghai measure has fallen 3 percent this year and trades at 8.6 times projected profit for the next 12 months, compared with the seven-year average of 15.3, according to data compiled by Bloomberg. Trading volumes were 4.1 percent above the 30-day average today, Bloomberg data showed.
Guangzhou Hi-Target Navigation surged 10 percent to 27.89 yuan. Chengdu Gotecom Electronic Technology Co. gained 6.8 percent to 19.18 yuan. Beijing BDStar Navigation Co. climbed 8 percent to 39.69 yuan.
The U.S. military flew two unarmed B-52 bombers into a disputed air-defense zone claimed by China, he first test of China’s response amid escalating tensions in the region that have implications for international air travel.
China announced the air-defense identification zone effective Nov. 23 and said its military will take “defensive emergency measures” if aircraft enter the area without reporting flight plans or identifying themselves.
CSR, the nation’s biggest train maker, added 2.9 percent to 5.28 yuan, a third day of gains. China CNR, the second largest, rose 1.6 percent to 5.61 yuan.
China, Hungary and Serbia will set up working groups immediately and advance the railway project as rapidly as possible, Xinhua cited Premier Li Keqiang as saying during his European trip.