Most Chinese stocks rose as a report showing an expansion in manufacturing overshadowed losses for the nation’s biggest oil companies.
Gauges of technology and material companies paced gains for industry groups after the Purchasing Managers’ Index reached a six-month high of 51 in June. Jiangxi Copper Co. surged 3.4 percent. Guangdong Ellington Electronics Technology Co. jumped 44 percent in its first day of trading in Shanghai. China Petroleum and Chemical Corp. plunged 3.2 percent after Asia’s biggest refiner disclosed rules it will use to screen potential private investors for its fuel retailing operations.
The Shanghai Composite Index advanced 0.1 percent to 2,050.38 at the close, with about five stocks rising for every three that fell. The gauge climbed 0.7 percent last quarter, the first advance since September, after China cut reserve-requirement ratios for some banks and introduced mini-stimulus including infrastructure spending to prevent a property slowdown from endangering Premier Li Keqiang’s growth target.
“The PMI was good today and recent data show a stabilizing economy,” said Zhang Haidong, analyst at Tebon Securities Co. “Investors are worried this means the government will slow down stimulus. Also companies are reporting earnings soon. There are expectations they will be weaker from a year ago.”
The CSI 300 Index was little changed. The Bloomberg China-US Equity Index advanced 0.2 percent yesterday. The Shanghai Composite has fallen 3.1 percent this year amid concern falling property prices may drag down the economy. The index trades at 7.5 times projected 12-month earnings, compared with 31.3 times for the ChiNext index of small-company stocks, according to data compiled by Bloomberg. Trading volumes in the Shanghai index jumped 29 percent above the 30-day average.
Today’s PMI reading from the National Bureau of Statistics and China Federation of Logistics and Purchasing exceeded the May figure of 50.8. Numbers above 50 signal expansion.
The final June reading of a separate manufacturing gauge from HSBC Holdings Plc and Markit Economics today was 50.7, compared with 49.4 in May. The preliminary reading unexpectedly rose to a seven-month high of 50.8 from May’s final 49.4, a report showed June 23.
A gauge of technology shares in the CSI 300 climbed 1.8 percent, the most among 10 industry groups. Yonyou Software Co. surged 10 percent. Guangdong Ellington Electronics became the second Shanghai-listed company to rally 44 percent this week after listing shares in the city. Shanghai Lianming Machinery Co. rose 10 percent after surging by the limit yesterday.
Jiangxi Copper, the biggest producer of the metal, surged to the highest level since May 13. Aluminum Corp. of China Ltd., known as Chalco, advanced 0.7 percent.
“Rising demand and the relative weak ‘raw material inventory’ index means demand for raw material will perhaps rise in coming months,” Lu Ting, China economist at Bank of America Corp. wrote in a note to clients. “We expect Beijing to continue rolling out a slew of small-scale measures to deliver the around-7.5 percent annual growth target.”
Sinopec slid for the first time in six days, losing 3.2 percent. The company, which is selling assets after Premier Li Keqiang pledged this year to allow non-state capital in oil and power projects, said it will consider bidding price, size of investment, brand image and financial strength when selecting investors.
Sinopec has rallied 14 percent this year, taking its price-earnings ratio to 9.1 times reported earnings, up from the three-year average of 8.8. PetroChina Co., the biggest Chinese oil company, fell to the lowest level since June 12. Those two stocks contributed the most to the Shanghai Composite’s loss.
Hong Kong’s markets are shut today for the anniversary of the city’s return to Chinese rule in 1997. Tens of thousands are set to march to demand full democracy, highlighting opposition to controls on the election of the city’s top official.