China’s stocks rose, sending the benchmark index to a three-week high, before the release of inflation data tomorrow as Datang International Power Generation Co. led a rally for utilities on a restructuring plan.
Datang Power jumped at least 10 percent in Shanghai and Hong Kong on plans to restructure its coal-to-chemical business. Sinocare Inc. surged 10 percent as the ChiNext index rose for the first time in three days. Yanzhou Coal Mining Co. paced declines among energy stocks with a 1.3 percent loss.
The Shanghai Composite Index added 0.2 percent to 2,064.02 at the close. Consumer prices probably rose 2.4 percent in June, slowing from May’s 2.5 percent gain, according to the median estimate of 51 economists surveyed by Bloomberg. Producer prices probably declined 1 percent, compared with a 1.4 percent drop in May. Exports may have grown 10.4 percent in June from 7 percent, estimates show. The trade data will be released July 10.
“Investors are cautious as it’ll be difficult for major economic data to exceed market expectations and they won’t give the market a lift,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. China’s economic slowdown will curb earnings growth, Wang said, estimating profits will grow 6 percent in the second quarter, down from 8.5 percent in the first quarter.
The CSI 300 Index added 0.2 percent to 2,180.47. The Hang Seng China Enterprises Index was little changed at 3:42 p.m. The Bloomberg China-US Equity Index slid 1.3 percent yesterday.
The Shanghai Composite has dropped 2.4 percent this year amid concern new stock offerings will divert funds from existing shares. About 15 companies are expected to get approval documents for initial public offerings each month from July to December, the China Securities Journal reported, citing an unidentified person from the industry.
The Shanghai index is valued at 7.6 times 12-month projected earnings, compared with the five-year average multiple of 11.5, according to data compiled by Bloomberg. Trading volumes were 13 percent higher than the 30-day average.
Datang Power surged 10 percent in Shanghai and 22 percent in Hong Kong. The company signed a restructuring accord with China Reform Holdings Corp., a state-owned asset management company, for its coal-to-chemical business, according to an exchange statement.
TCL Corp., a consumer-electronics maker, added 2.6 percent after estimating first-half profit will increase as much as 92 percent from a year earlier. Yanzhou Coal dropped for a second day. Yangquan Coal Industry Group Co. slid 0.7 percent. Xi’An Aero-Engine Plc retreated 2.9 percent.
The ChiNext rose 1.2 percent, erasing a loss of as much as 1 percent. The gauge trades at 58 times reported earnings, compared with 10 times for the Shanghai Composite, according to data compiled by Bloomberg.
China’s small-company stocks will “lose steam” in the upcoming earnings season, China International Capital Corp. analysts wrote in a note yesterday. UBS AG sees the small-caps rebound coming to an end with interim results likely to “undershoot” expectations, analyst Bo Zhang wrote in a separate note.