China’s stocks rose, sending the benchmark index to its highest level in two months, as energy companies rallied and investors speculated smaller banks will form alliances to expand their business on mobile devices.
Bank of Beijing Co. jumped 10 percent after Shanghai Securities News reported the lender and Xiaomi Corp. agreed to cooperate on mobile payments. China Citic Bank Corp. also climbed by the daily limit. Sinopec Shanghai Petrochemical Co. and China Petroleum & Chemical Corp. surged more than 3 percent. Tasly Pharmaceutical Group Co. jumped 5.9 percent after China International Capital Corp. added the company to its recommended investment portfolio.
The Shanghai Composite Index rose 1.1 percent to 2,142.55 at the close, its highest level since Dec. 18. The gauge has rebounded 7.6 percent from its Jan. 20 low as record new credit and improving trade offset signs of a slowdown in manufacturing. Overnight money-market rates dropped to a nine-month low.
“Internet finance and mobile payment are hot topics in the market,” said Dai Ming, a fund manager at Hengsheng Hongding Asset Management Co. “Through these new channels, banks can expand their customer bases and serve more small and medium clients.”
The CSI 300 Index added 1.2 percent to 2,308.66. The Hang Seng China Enterprises Index gained 0.4 percent. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.- listed Chinese companies, rose 1.1 percent yesterday.
The Shanghai Composite is valued at 8.2 times 12-month projected earnings, compared with the five-year average multiple of 12.3, according to data compiled by Bloomberg. Trading volumes in the index were 73 percent above the 30-day average today, Bloomberg data showed.
A measure of financial stocks in the CSI 300 climbed 2 percent, the most among the 10 industry groups.
Bank of Beijing surged 10 percent to 7.95 yuan. The lender signed an agreement with Xiaomi to cooperate on mobile payments, product customization and channel expansion, the Shanghai Securities News reported on its website. Both companies will explore selling wealth management products, insurance and money market funds on Xiaomi’s mobile platform, the report said.
Citic Bank jumped 10 percent to 5.16 yuan. The stock climbed 34 percent last week on speculation about cooperation between the bank, China UnionPay Co. and Alibaba.com Ltd. The lender denied any tie-up on Feb. 14.
The overnight repurchase rate, a gauge of funding availability on the interbank market, fell for a seventh day, sliding 28 basis points to 2.4 percent as of 3:26 p.m., according to a weighted average by the National Interbank Funding Center. It’s headed for the lowest level since May 15.
An ample supply of cash offset the impact of the central bank draining funds. The central bank withdrew 48 billion yuan ($7.9 billion) by selling 14-day repurchase contracts at 3.8 percent yesterday. That was the first repo auction since June.
“Liquidity has loosened recently, bank valuations are low and investors expect 2013 earnings to be better than their initial estimates,” Becky Xu, an analyst Shenyin & Wanguo Securities Co., said by phone.
A gauge of health-care companies in the CSI 300 climbed 0.8 percent. Tasly Pharmaceutical led gains for drugmakers, rising 5.9 percent to 45.04 yuan. CICC upgraded Chinese health-care and auto stocks to overweight.
Kweichow Moutai Co., China’s biggest liquor maker by market value, rose 1.7 percent to 149.53 yuan. Jiangsu Yanghe Brewery Joint-Stock Co. advanced 3.6 percent to 54.50 yuan.
Shares of liquor makers may rise 50 percent as wholesale prices of Moutai and Wuliangye were stable during the lunar new year and didn’t decline as expected by investors, Dong Junfeng, an analyst at China Galaxy Securities Co., wrote in a report dated Feb. 17. The rebound in liquor makers may continue as current prices spur consumption, boosting profits, it said.
China Petroleum, the biggest Asian oil refiner that’s also known as Sinopec, advanced 3.8 percent to 4.70 yuan. Sinopec Shanghai surged 10 percent to 3.50 yuan.
HSBC Holdings Plc and Markit Economics are scheduled to release the preliminary manufacturing index, known as the flash PMI, for February tomorrow. The reading was unchanged from last month at 49.5, according to the median estimate of 17 analysts in a Bloomberg survey. A number below 50 indicates contraction.
— With assistance by Shidong Zhang