China’s stocks rose, capping the benchmark index’s biggest weekly gain in three months, as material producers rallied and money-market rates declined.
Jiangxi Copper Co. and Tongling Nonferrous Metals Group Co. advanced more than 2 percent after copper prices gained the most in three weeks. Huadian Energy Co. jumped 9.7 percent after the China Securities Journal reported parent China Huadian Corp. will consolidate group assets and inject some assets into listed units. The seven-day repurchase rate slid the most since July 3.
The Shanghai Composite Index rose 1 percent to 2,126.61 at the close. The measure added 3.3 percent this week for its biggest weekly advance since April, after a manufacturing index jumped to an 18-month high, more cities relaxed their property curbs and the central bank refrained from repo operations to boost liquidity as new share sales started.
“There’s a consensus that China’s economy can stabilize and the market is confident about the outlook,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. in Shanghai, which oversees about $193 million. “Investors are moving into low-valuation cyclical stocks betting on a pick-up in growth.”
The CSI 300 Index rose 1.1 percent to 2,260.45. The Hang Seng China Enterprises Index added 0.2 percent as of 3:39 p.m. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, added 1 percent yesterday.
The Shanghai Composite is valued at 7.9 times 12-month projected earnings, compared with the five-year average multiple of 11.3, according to data compiled by Bloomberg. Trading volumes in the index were 40 percent above the 30-day average.
A measure of material stocks in the CSI 300 rose 2.2 percent today and surged 6.8 percent this week, the most among 10 industry groups. Jiangxi Copper, China’s biggest producer of the metal, climbed 2.4 percent in Shanghai today and 2.1 percent in Hong Kong. The stock has been the biggest gainer in the H-shares gauge in the past month with a 23 percent jump.
Tongling Nonferrous Metals gained 4.8 percent in Shenzhen. Zhuzhou Smelter Group Co. jumped 4.3 percent. Yunnan Chihong Zinc & Germanium Co. surged 6 percent.
Copper climbed 1.9 percent in New York yesterday, the biggest gain since July 2. Zinc rose to the highest since August 2011 in London. The rally came after HSBC Holdings Plc and Markit Economics released a preliminary Purchasing Managers’ Index, known as flash PMI, that showed a reading of 52 for this month, compared with the 51 median estimate.
Huadian Energy soared 9.7 percent. The parent may announce its asset consolidation and coal business reform plan in the second half of this year, the China Securities Journal said.
PetroChina Co. and China Petroleum & Chemical Corp., the two biggest Chinese refiners, slid at least 0.8 percent in Hong Kong. Their shares have climbed at least 20 percent this year.
Mark Mobius says it’s not too late to buy into the rally in Chinese stocks.
The executive chairman of Templeton Emerging Markets Group predicts the nation’s equity market will climb another 20 percent, following a 19 percent surge in the Hang Seng China index since March 20. Mobius, whose $12 billion Templeton Asian Growth Fund has outperformed 94 percent of peers this year, favors state-owned banks and energy companies because of their cheap valuations and the government’s plans to open up state-dominated industries.
“Usually when you enter a phase like this, you’re looking at at least 20 percent upside” from current levels, Mobius, who oversees more than $40 billion in emerging markets, said in an interview yesterday in Hong Kong. “If you look at the valuations of SOEs, you’ll see that they are very cheap.”
The seven-day repurchase rate, which measures interbank funding availability, fell 4.1 basis points to 4.12 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center.