Aug. 19 (Bloomberg) -- Chinese media companies rallied, sending the Shanghai Composite Index to an eight-month high, after President Xi Jinping said the nation will build a few groups into influential content providers.
People.cn Co., the online unit of the Communist Party’s newspaper, Shanghai Xinhua Media Co. and Zhe Jiang Daily Media Group Co. all jumped by the 10 percent daily limit. The Shanghai Composite rose 0.3 percent to 2,245.33, the highest close since Dec. 5. China will create several media groups that are strong, influential and credible while promoting the integration of new and traditional media, the official Xinhua News Agency cited Xi as saying.
The government is revamping state-controlled media firms as part of a broader campaign to reform government companies and reduce corruption, according to Tebon Securities Co. Xi’s comments also follow a Xinhua report that the country issued new rules this month restricting the dissemination of certain types of news on instant-messaging applications to only authorized media outlets.
“With Xi’s proposal, investors are expecting reforms in the media to speed up and it could be the hot spot for the second half,” said Zhang Haidong, an analyst at Tebon in Shanghai. “The government wants the media to be more market-oriented. This will help in reducing corruption and aid in supervision.”
People.cn surged to the highest level since Feb. 24. Shanghai Xinhua Media jumped for a third day, while Zhe Jiang Daily Media Group rose to the highest since March 18.
The CSI 300 Index was little changed at 2,374.77. The Hang Seng China Enterprises Index, or H-shares gauge, advanced 0.3 percent at 3:08 p.m. local time. The ChiNext index of smaller companies gained 0.5 percent, extending yesterday’s 2.6 percent rally.
The Shanghai index has risen about 13 percent from this year’s low as monetary easing, accelerated government spending and gains in manufacturing spur speculation the nation will meet its 7.5 percent economic expansion target. The gauge is valued at 8.2 times 12-month projected earnings, compared with a multiple of 7.3 for the H-shares gauge, according to data compiled by Bloomberg.
Financial, health-care, and utility shares were the biggest losers among 10 industry groups in the CSI 300 index today. Guoyuan Securities Co. slid 4.7 percent, paring this year’s gain to 28 percent. Sichuan Kelun Pharmaceutical Co. lost 1 percent.
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