May 28 (Bloomberg) -- Chinese technology stocks rose the most in three months amid speculation they will benefit from the government’s dispute with the U.S. over cyber-spying.
Yonyou Software Co. and Aisino Co. jumped more than 6 percent, leading the CSI 300 Information Technology Index to a 2.8 percent gain. Lenovo Group Ltd. climbed in its longest winning streak since 2003 in Hong Kong and Inspur International Ltd. surged 9.9 percent. Shandong Gold Mining Co. slid to its lowest level since January after bullion prices slipped to a more than three-month low and industrial profit figures through April showed earnings declined in the mining industry.
The Shanghai Composite Index gained 0.8 percent to 2,050.23 at the close, heading for a 1.2 percent advance this month. The Chinese government is reviewing whether domestic banks’ reliance on high-end servers from International Business Machines Corp. compromises the nation’s financial security, according to people familiar with the matter. The review comes a week after American prosecutors indicted five Chinese military officers for allegedly hacking into computers of U.S. companies.
“The nation’s information security is a good thematic investment play for investors as we’ve seen some tension between China and the U.S. recently,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “Expectations about replacing with domestic technology products have provided adequate buying excuses.”
The CSI 300 Index rose 1 percent to 2,169.35. The Hang Seng China Enterprises Index added 1.1 percent. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, lost 0.3 percent in New York yesterday.
The Shanghai Composite is valued at 7.6 times 12-month projected earnings, compared with the five-year average multiple of 11.7, according to data compiled by Bloomberg. Trading volumes in the index were little changed from the three-month average today.
The CSI 300 Information Technology Index has climbed 5.5 percent since the U.S. indicted the Chinese military officials on May 19, the best performance among 10 industry groups. Yonyou Software jumped to a one-month high today, while Aisino gained 6.9 percent. Lenovo, which agreed to buy IBM’s low-end server business this year, advanced 1 percent. ZTE Corp., China’s second-biggest maker of phone-network equipment, rallied 4.4 percent in Shenzhen.
Shandong Gold, China’s second-largest bullion producer, fell for a third day while Zhongjin Gold Co., the third biggest, lost 0.4 percent.
China’s industrial profits in the January-April period rose 10 percent, versus 10.1 percent through March. Earnings at mining and smelting companies fell, according to data from the Beijing-based National Bureau of Statistics.
Gold for immediate delivery decreased as much as 0.3 percent to $1,261.71 an ounce, the lowest level since Feb. 7, according to Bloomberg generic pricing. The metal sank 2.2 percent yesterday in its biggest one-day decline this year after data showed U.S. durable goods orders unexpectedly rose in April.
China’s economy is in a rare “complicated” situation, People’s Bank of China Governor Zhou Xiaochuan said during a visit to the central bank’s branch Jiaxing city this week.
The government may loosen monetary policy in “some areas” such as cutting lenders’ reserve requirement ratio in the central and western regions of the country, the China Securities Journal said in a front-page commentary written by reporter Zhang Qinfeng.
Manulife Asset Management is buying Chinese stocks for the first time this year, betting that government steps to buoy growth will finally boost the lowest equity valuations in Asia.
Manulife shifted money into the Hong Kong market this month from India after that country’s bourse surged in the run-up to national elections, said Ronald Chan, head of Asian equities at Manulife, which oversees $269 billion. Investors are too focused on economic data that doesn’t yet reflect efforts by Chinese policy makers to put a floor under the slowdown, Chan said.
“People have said China’s been cheap, but there’s been no catalyst,” Chan said in a May 22 interview. “I think we’re beginning to see that catalyst coming through. We continue to invest in growth-related names because they can deliver in terms of earnings, and we barbelled that with what we think will benefit on the back of reforms.”
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