Most Chinese stocks rose as power producers climbed after Citic Securities Co. said earnings for utility companies may exceed estimates. Technology companies extended losses. Data showed export growth trailed estimates.
Huadian Power International Corp. and Shanghai Electric Power Co. advanced at least 1.6 percent. Xiamen King Long Motor Group Co. jumped 6.1 percent after the government said electric cars will be exempt from purchase taxes. GoerTek Inc., a supplier to Apple Inc., plunged the most in three months as technology and other “new economy” industries widened losses.
About seven stocks rose for every four that dropped on the Shanghai Composite Index, which slipped less than 0.1 percent to 2,038.34 at the close. While recent data such as manufacturing show the economy is stabilizing, strategists from Bank of America Corp. and Bocom International Holdings Co. say a decline in property prices continue to pose a risk to growth.
“There were no real surprises in the trade data,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “The 2,000 level seems to be firm and there’s little chance the level will be breached as economic growth is stabilizing.”
The CSI 300 Index lost 0.3 percent to 2,142.85. The Hang Seng China Enterprises Index added 0.1 percent. The Bloomberg China-US Equity Index gained 0.2 percent yesterday.
Overseas shipments gained 7.2 percent from a year earlier, the customs administration said, compared with the median estimate for a 10.4 percent increase in a Bloomberg News survey of economists. Imports rose 5.5 percent, leaving a $31.6 billion trade surplus.
China’s economy has shown signs of stabilization after measures dubbed a “mini-stimulus” by some analysts. Factory-gate prices fell in June at the slowest pace in more than two years, according to government data released yesterday. Two gauges of manufacturing rose to the highest levels this year, reports showed on July 1.
A sub-index tracking utilities in the CSI 300 advanced 0.5 percent, extending gains to 1.8 percent this year, the best performer among 10 industry groups. Huadian Power surged 4 percent, closing at its highest level since Oct. 30. Shanghai Electric Power, supplier of a third of the electricity in the city, added 1.6 percent.
Besides the prospect of lower coal costs boosting earnings, recent share gains for power producers have also been fueled by investors’ switch to defensive stocks and attractive dividend yields, Wu Fei, an analyst at Citic Securities, wrote in a note yesterday. The average dividend yield for the companies in the utility measure is 3.8 percent, compared with 2.6 for the broader index, according to data compiled by Bloomberg.
Xiamen King Long Motor surged the most in a week. Wanxiang Qianchao Co., the listed unit of China’s largest auto-parts maker, added 2.9 percent.
Authorities will exclude new-energy autos -- China’s term for electric cars, plug-in hybrids and fuel-cell vehicles --from the purchase taxes starting September 1 this year until the end of 2017, according to a statement posted on the central government website yesterday, citing a State Council meeting.
A measure of technology stocks dropped 1.6 percent for the biggest loss among the CSI 300’s sub-indexes. GoerTek slid 6.2 percent while Zhejiang Dahua Technology Co., a maker of surveillance equipment, slumped 4.9 percent for a third day of losses.
After surging 39 percent for the biggest gains in China’s stock market last year, the technology gauge has lost 12 percent in 2014. The companies, tied to what analysts have dubbed China’s “new economy,” are now falling in tandem with “old economy” stocks in state sectors such as commodities and finance that fueled growth in the last decade.
The Shanghai Composite is valued at 7.5 times 12-month projected earnings, compared with the five-year average multiple of 11.5, according to data compiled by Bloomberg. Trading volumes in the index were 14 percent above the 30-day average.
Some of the world’s biggest stock investors are shifting their China bets to mainland companies from Hong Kong after the city’s shares climbed to the most expensive levels in 12 years.
The MSCI Hong Kong Index traded at 16 times reported earnings at the end of June, versus a multiple of 9.8 for the MSCI China index, the widest gap since 2002. Hong Kong’s gauge has outperformed the China measure for four straight years, rallying 160 percent from its low amid the global credit freeze.
Amundi Asset Management, Credit Suisse Group AG and Sumitomo Mitsui Trust Bank Ltd., which oversee almost $3 trillion, say Hong Kong stocks will struggle as reduced Federal Reserve stimulus weighs on developers and banks that make up more than 35 percent of the index. The investors have joined BlackRock Inc., the world’s largest money manager, in favoring Chinese shares amid signs Premier Li Keqiang is succeeding in efforts to keep economic growth from falling below 7.5 percent.