Chinese stocks rose for a second day, with a gauge of technology shares climbing to a record, amid optimism government stimulus measures will buoy the economy and boost earnings.
Yonyou Network Technology Co., a software maker, and Searainbow Holding Corp. jumped more than 9 percent. Zoomlion Heavy Industry Science & Technology Co. surged 12 percent in Hong Kong on a plan to buy Italian renewables company Ladurner Ambiente. Ping An Insurance (Group) Co. and Bank of Communications Ltd. dropped more than 1 percent in Hong Kong.
The Shanghai Composite Index climbed 1.7 percent to 4,910.53 at the close, erasing a 0.7 percent loss. The gauge has rallied 52 percent this year, the most among global benchmark indexes, as the government cut interest rates and margin debt climbed to a record. The measure has recovered almost all the losses incurred during Thursday’s 6.5 percent rout as volatility rises.
“The new-economy stocks have been the major purchase today as investors believe that their earnings will be solid and faster than those in traditional industries,” said Wu Kan, a money manager at Dragon Life Insurance Co. in Shanghai, which oversees about $3.3 billion. ‘The market will soon test the 5,000-point level.’’
The CSI 300 Index gained 1.7 percent. The ChiNext index jumped 4.9 percent to close at an all-time high for a second day. Hong Kong’s Hang Seng China Enterprises Index dropped 0.7 percent, while the Hang Seng Index slipped 0.5 percent.
Volatility has increased to a five-year high in Shanghai as record margin trading fueled the world’s biggest rally. The Shanghai gauge posted the steepest two-day retreat since 2009 last week after rising 143 percent in 12 months, only to rally the most since January on Monday. Trading volumes in the index were 8.8 percent higher than the 30-day average on Tuesday.
The CSI 300 Information Technology Index surged 4.2 percent to an all-time high, extending this year’s advance to 137 percent. Yonyou Network Technology jumped by the 10 percent daily limit to close at a record, while Searainbow Holding added 9.8 percent.
The ChiNext index of small companies may continue to outperform main-board stocks in the second half as earnings for emerging new industries accelerate amid slowdown in traditional economy, analysts led by Huang Ruogu and Qin Peijing at Citic Securities Co. wrote in its second-half strategy report.
The ChiNext may rise to 4,500 in the second half, the report said, a 15 percent gain from Tuesday’s close. The Shanghai Composite, dominated by traditional-economy companies, may trade around 5,500 in the period, according to the report.
The Shanghai index is valued at 18.4 times 12-month projected earnings, compared with the five-year average multiple of 10.2, according to data compiled by Bloomberg.
Ping An, China’s second-biggest insurer, lost 1.4 percent in Hong Kong, while BoCom retreated 1.4 percent.
China National Nuclear Power Corp. and 22 other companies start marketing initial public offering shares Tuesday and Wednesday, potentially locking up 4.9 trillion yuan ($790 billion), according to the median estimate of six analysts surveyed by Bloomberg.
Margin traders increased holdings of shares purchased with borrowed money on Monday, with the outstanding balance of margin debt on the Shanghai Stock Exchange rising by 1.4 percent to a record 1.37 trillion yuan.
— With assistance by Shidong Zhang