China’s stocks rose to a two-week high as a gauge of technology companies jumped to a record on optimism state plans to boost the industry will lift profits.
Yonyou Network Technology Co. and DHC Software Co. climbed more than 2 percent as the CSI 300 Information Technology Index advanced. Siasun Robot & Automation Co. jumped by the 10 percent daily limit after the government yesterday outlined a plan to support high-tech manufacturing. Hanergy Thin Film Power Group Ltd. plunged 47 percent in Hong Kong before trading was suspended.
The Shanghai Composite Index added 0.7 percent to 4,446.29 at the close, extending Tuesday’s 3.1 percent rise, the most since Jan. 21. The gauge of technology companies has more than doubled this year, the best performer among 10 industry groups on the CSI 300 Index.
“Technology stocks are closely linked to the big picture of transforming China’s economic structure, and investors like the theme,” said Wu Kan, a money manager at Dragon Life Insurance Co. in Shanghai, which oversees about $3.3 billion. “The market is speculating that the government will do more to support technology innovation and mass entrepreneurship.”
The CSI 300 rose 0.5 percent. Hong Kong’s Hang Seng China Enterprises Index added 0.3 percent, while the Hang Seng Index dropped 0.4 percent.
Trading volumes in the Shanghai index were 8.4 percent lower than the 30-day average. The measure has rallied 121 percent over the past year amid speculation the government will take steps to bolster growth in the economy. It’s valued at 17 times projected 12-month earnings, compared with the five-year average multiple of 10.2, according to data compiled by Bloomberg.
The information technology index climbed 1.5 percent, extending this year’s advance to 105 percent. Yonyou Network gained 4.9 percent to a record close, while DHC Software increased 2.9 percent.
Siasun Robot closed at an all-time high, while China Shipbuilding Industry Co., the nation’s largest maker of vessel equipment, jumped 4.7 percent. Jiangsu Broadcasting Cable Information Network Corp. led gains by media companies.
The government will boost fiscal and tax incentives to support manufacturing in 10 major areas, including information technology, robotics and new energy vehicles in the next 10 years, the Xinhua News Agency reported Tuesday, citing the State Council.
Shares of Hanergy, the Chinese solar equipment maker controlled by Li Hejun, plummeted to HK$3.91 before trading in the stock was suspended at 10:40 a.m. in Hong Kong, shaving HK$144.3 billion ($18.6 billion) off its market value. The company is hosting its annual general meeting in Hong Kong.
Before the decline, the stock had surged more than sixfold in the past year amid questions about its revenue. About 61 percent of Hanergy’s sales are derived from parent Hanergy Holding Group, the listed company said in March.
Short sellers bowed out of the stock at just the wrong time, with wagers against the shares falling on Monday to the lowest level since December 2013.
A preliminary index of manufacturing by HSBC Holdings Plc and Markit Economics, known as the flash PMI, probably rose to 49.3 in May from 48.9 a month earlier, according to the median estimate of analysts in a Bloomberg survey. A reading below 50 indicates contraction. The number is due on Thursday.
Twenty companies are scheduled to sell initial public offering shares from Tuesday to Thursday, which may freeze 2.8 trillion yuan ($451.1 billion), based on the median estimate of a Bloomberg survey. The liquidity lockup from subscriptions will peak on Wednesday, China International Corp. said in a report last week.
Margin traders increased holdings of shares purchased with borrowed money for a sixth day on Tuesday, with the outstanding balance of margin debt on the Shanghai Stock Exchange rising by 1.2 percent to a record 1.29 trillion yuan.
— With assistance by Shidong Zhang