China’s stocks climbed for a second day as money-market rates slid after the central bank’s first reverse-repurchase operations in three weeks. Technology and Guangdong province-based companies led gains.
GoerTek Inc., an Apple Inc. supplier, jumped the most in a month after the U.S. company signed a deal with China Mobile Ltd. to sell iPhones. Guangzhou Baiyun International Airport Co. gained 4.1 percent after the Shanghai Securities News said a free-trade zone plan for Guangdong has been submitted to the State Council. Jiangsu Hengrui Medicine Co. fell 3.4 percent to drag down health-care companies.
The Shanghai Composite Index rose 0.2 percent to 2,092.91 at the close. The People’s Bank of China auctioned 29 billion yuan ($4.8 billion) of seven-day reverse repos, according to two traders. The overnight repurchase rate, a gauge of funding availability in the banking system, tumbled 278 basis points to 6.45 percent as of 3:19 p.m.
“The cash crunch eased a bit after the reverse repo,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “But liquidity concerns still linger as investors are not sure when the situation will end. We remain cautious now as there are no catalysts from the policy front to support equities towards the end of the year.”
The CSI 300 Index added 0.2 percent to 2,288.25. The Hang Seng China Enterprises Index of Hong Kong-listed Chinese shares gained 1.8 percent, the most since Nov. 18, before a two-day holiday. The Bloomberg China-US Equity Index added 0.6 percent in New York yesterday.
A gauge of technology companies in the CSI 300 climbed 1.9 percent, the most since Nov. 27. GoerTek added 3.8 percent to 35.85 yuan. Suzhou Anjie Technology Co. advanced 3.3 percent to 33.66 yuan.
China Mobile will sell the iPhone 5s and 5c models in its retail stores starting Jan. 17, the Chinese company and Apple said in a statement that provided no financial terms. The phones for China Mobile’s network will also be available in Apple’s retail stores in China under the multiyear agreement.
A plan for a Guangdong-Hong Kong-Macau free-trade zone with a more open “negative list” than Shanghai’s trade area was submitted to the State Council for approval in mid-December, the Shanghai Securities News reported, citing unidentified people.
Guangzhou Baiyun jumped 4.1 percent to 7.11 yuan. Huafa Industrial climbed 6.5 percent to 7.54 yuan. Guangzhou Shipyard International Co., a unit of China’s biggest shipbuilder, surged 5.2 percent.
Soaring money-market rates in China sparked a stock sell-off this month that’s wiped $156 billion of market value from local equities, which are poised for the biggest monthly loss since a record cash crunch earlier this year.
“After the liquidity squeeze and the current tightness, market participants will be more cautious and hence money-market rates could remain elevated until the Chinese New Year break at the end of January,” said Frances Cheung, head of Asian rates at Credit Agricole CIB. The PBOC is likely to conduct reverse repos again on Thursday as today’s amount wasn’t big and the tenor doesn’t cover the year-end, she said.
Ping An Bank Co. lost 2.1 percent to 11.70 yuan. China Merchants Bank Co. slid 1 percent to 10.17 yuan. China Construction Bank Corp. sank 0.7 percent to 4.14 yuan.
The Shanghai Composite has fallen 7.8 percent this year. Losses accelerated this month after private manufacturing data showed an unexpected decline. Trading volumes were 36 percent below the 30-day average today, according to data compiled by Bloomberg.
The Shanghai index trades at 8.1 times projected profit for the next 12 months, the cheapest since July 31, according to data compiled by Bloomberg. Its 14-day relative strength measure, gauging how rapidly prices have advanced or dropped during a specified time period, was at 29.1 yesterday. Some investors consider readings below 30 as a sign that an asset is poised to rise.
A gauge of pharmaceutical stocks dropped 0.5 percent, the most among the CSI 300’s 10 industry groups. It jumped 2.9 percent yesterday on expectations the outbreak of avian influenza will boost medical expenditure.
Jiangsu Hengrui Medicine fell 3.4 percent to 37.07 yuan. Zhejiang Medicine Co. lost 1.8 percent to 10.75 yuan.