Chinese stocks rose for a seventh day, with the Shanghai Composite Index approaching the 5,000 level for the first time since 2008 on gains for commodity and power producers.
PetroChina Co., the biggest stock in the benchmark index, rallied 2.3 percent, while Jiangxi Copper Co. jumped 5.1 percent. Huaneng Power International Inc. paced an advance for utilities, surging 4 percent. Juneyao Airlines Co. soared 44 percent on its first day of trading, matching a similar jump by more than 100 companies that listed in the past year. Brokerages slumped after GF Securities Co. and Haitong Securities Co. raised margin requirements for stock financing.
The Shanghai Composite increased 0.6 percent to 4,941.71 at the close, extending gains over the past seven days to 15 percent. The index swung between gains and losses at least nine times amid concern that new share sales will sap liquidity. Subscriptions for 23 initial public offerings including China National Nuclear Power Co. may lock up 4.9 trillion yuan ($790 billion) of liquidity starting early June, according to the median estimate of six analysts surveyed by Bloomberg.
“The momentum is still there,” said Henry Lo, Hong Kong-based head of trading at Mirae Asset Global Investment Ltd. “People in the mainland expect the Shanghai market to rally through the 5,000 and keep rising against the backdrop of government stimulus.”
Hong Kong’s Hang Seng China Enterprises Index fell 0.7 percent, while the Hang Seng Index slid 0.6 percent. The CSI 300 Index decreased 0.3 percent. The Bloomberg China-U.S. equity index dropped 1.5 percent on Tuesday.
The Shanghai Composite has surged 145 percent in the past year, the most among 93 global indexes tracked by Bloomberg, on speculation the central bank will add to three interest cuts to spur growth and widen access to capital markets in the mainland. Its valuation climbed to 24.3 times reported profit, compared with the seven-year average of 15.5.
FTSE Group will include China’s stocks in two new emerging-market indexes, laying the groundwork to include the world’s best-performing equities in benchmarks tracked by international money managers. The move is transitional before the London-based index provider ultimately adds mainland shares, according to a statement released Tuesday at a briefing in Hong Kong.
Gauges of utilities, material and energy companies in the CSI 300 rallied at least 2 percent for the steepest gains among 10 industry groups. PetroChina rose to a three-week high after its parent company found a 100 million metric ton tight-oil deposit in Shaanxi province. Zijin Mining Group Co. soared 9.9 percent after China’s most valuable gold producer outlayed $710 million in two deals that extend its reach across the globe. Yanzhou Coal Mining Co. advanced 3.5 percent, while Huadian Power International Corp. added 3.7 percent.
Chinese industrial companies’ profits rose 2.6 percent in April, compared with a drop of 0.4 percent in March, according to data from the National Bureau of Statistics.
A gauge of financial shares in the CSI 300 dropped 1.2 percent. Ping An Insurance (Group) Co. decreased 2.3 percent, sliding for the first time in seven days. GF Securities slipped 1.2 percent after it raised the required margin ratio for stock buying. Haitong Securities slid at least 0.8 percent in Shanghai and Hong Kong after it said it will raise the required margin ratio for stock buying and short selling by 5 percentage points from May 28.
Margin traders increased holdings of shares purchased with borrowed money on Tuesday, with the outstanding balance of margin debt in Shanghai climbing to an all-time high of 1.33 trillion yuan.