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China’s Stocks Rally to Six-Week High on Stimulus Expectations

A customer watches share prices on an electronic stock board at a security firm in Shanghai. Photographer: Tomohiro Ohsumi/Bloomberg
A customer watches share prices on an electronic stock board at a security firm in Shanghai. Photographer: Tomohiro Ohsumi/Bloomberg

April 8 (Bloomberg) -- China’s stocks climbed, sending the benchmark index to a six-week high, on speculation the government will take further steps to bolster economic growth.

Gauges tracking financial and energy companies surged at least 2.6 percent. Industrial Bank Co. advanced the most in seven months and China Petroleum & Chemical Corp., Asia’s largest refiner, rallied 2 percent. Great Wall Motor Co. jumped 6.8 percent after the nation’s car sales rose. Shanghai Chaori Solar Energy Science & Technology Co., the first Chinese company to default on corporate bonds onshore, fell by the maximum limit of 5 percent as a trading halt was lifted.

The Shanghai Composite Index climbed 1.9 percent to 2,098.28 at the close, as trading resumed after a holiday yesterday. China outlined a package of measures to support the expansion last week, including railway spending and tax relief, after easing funding restrictions for financial companies earlier this year. March trade figures are due this week after manufacturing indexes pointed to economic weakness.

“There’s speculation the government will introduce some measures to stabilize growth as the market expects March data to be poor,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai.

The CSI 300 Index rose 2.4 percent to 2,237.32. The Hang Seng China Enterprises Index advanced 1.6 percent in Hong Kong, poised for its highest close since Jan. 8. The measure has rebounded 12 percent since entering a bear market on March 20, sending its 30-day relative-strength index to 71, the highest since November.

PMI Gauges

Premier Li Keqiang is under pressure to address weakening economic growth amid concern the nation will miss its 7.5 percent growth target this year.

A Purchasing Managers’ Index fell to 48 in March, the lowest reading since July, from 48.5 in February, HSBC Holdings Plc and Markit Economics said April 1. Data last month showed fixed-asset investment rose at the slowest January-February pace since 2001, industrial production trailed estimates and exports fell by the most since 2009.

The CSI 300 index of financial companies jumped 3 percent, the most among 10 industry groups, paring its loss in the past 12 months to 10 percent. The gauge of energy producers rose 2.6 percent.

Industrial Bank advanced 8 percent and Huaxia Bank Co. climbed 4.7 percent. China Petroleum, also known as Sinopec, gained the most in two weeks. China Shenhua Energy Co., the nation’s largest coal producer, added 2.6 percent.

Auto Sales

Great Wall Motor rose to the highest level since Feb. 18, while SAIC Motor Corp. climbed 3.9 percent. Passenger-vehicle sales in China gained 9 percent last month, according to data by the Passenger Car Association, as deliveries rose from General Motors Co. to Toyota Motor Corp. and consumers brought forward purchases on concern more cities will limit ownership.

China won’t rely on a large stimulus like the one following the 2008 global financial crisis to boost its economy after a “string of lukewarm economic indicators,” according to a Xinhua News Agency commentary. Speculation of incoming stimulus is “misleading” and those anticipating a package will likely be “disappointed,” the commentary said.

The Shanghai Composite is valued at 7.7 times 12-month projected earnings, compared with the five-year average multiple of 12, according to data compiled by Bloomberg.

Global investors pulled $2.8 billion from funds focused on Chinese stocks this year after taking out $5.9 billion in 2013, according to EPFR Global, a Cambridge, Massachusetts-based data provider.

Chaori Solar slid to 2.46 yuan. The manufacturer said a bondholder is seeking to force it into bankruptcy restructuring. Trading in its shares was halted on Feb. 19.

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Richard Frost

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