China Stocks Rise Before Trade Data; Consumer Staples Lead Gains
China’s stocks rose for a third day before the release of trade data tomorrow, as gains by consumer staples producers and property developers overshadowed losses by drug and technology companies.
Liquor maker Kweichow Moutai Co. surged the most in eight months as valuations at 77 percent below the three-year average lured buyers. Pang Da Automobile Trade Co. climbed 8.2 percent after Citic Securities Co. rated the stock outperform. Kangmei Pharmaceutical Co. snapped its longest stretch of gains since March, while Goertek Inc. (002241), a supplier to Apple Inc., halted an 18 percent advance in the previous three days. Data may show that exports grew 9.1 percent in April, the slowest in five months, according to a Bloomberg survey of economists.
The Shanghai Composite Index (SHCOMP) rose 0.2 percent to 2,235.57 at the close, after changing directions at least 49 times. Five shares climbed for every four that fell on the measure, with trading volumes down 3.8 percent from the 30-day average. The CSI 300 Index added 0.2 percent to 2,529.94.
“The volume isn’t great enough to continue the gains we have had so far in May -- at least not the kind we saw in the past two sessions” when the Shanghai index rose more than 1 percent, Zhou Lin, an analyst at Huatai Securities Co., said by phone from Nanjing. “Investors don’t expect too much from the data over the next two days. They have come to terms the economy isn’t going to recover as fast as expected.”
The Shanghai Composite has slumped 7.9 percent from a Feb. 6 high on concern slowing economic growth is hurting earnings. China’s manufacturing missed forecasts in April while the services industry expanded at the slowest pace since August 2011, according to official surveys. The stocks measure trades at 9.2 times estimated earnings, compared with the seven-year average of 15.7, according to data compiled by Bloomberg.
Consumer-staple stocks rose 1.4 percent, the biggest gain on the CSI 300 after utilities. Kweichow Moutai, the largest producer of baijiu liquor, jumped 5.6 percent to 187.69 yuan, the most since Sept. 4. The stock trades at 10.8 times estimated profit, compared with the three-year average of 19.1. Wuliange Yibin Co., the second-largest, surged 2.6 percent to 22.87 yuan.
Pang Da surged 8.2 percent to 5.83 yuan, the biggest advance since Feb. 20. Citic Securities rated the stock outperform, saying auto dealers’ business environment will improve this year as growth in auto sales will accelerate to over 10 percent.
Property stocks led gains in the Shanghai index, with China Vanke Co., the biggest developer, surging 2.3 percent to 11.58 yuan after yesterday reporting contract sales of 12.4 billion yuan for April. Gemdale Corp. rose 1.4 percent to 7.43 yuan.
A gauge of technology stocks on the CSI 300 slid 1.1 percent, the most among 10 industry groups. Goertek fell 1 percent to 57.62 yuan. Kangmei led losses for drugmakers, falling 1.8 percent to 17.76 yuan.
Chinese imports probably rose 13 percent in April, less than the previous month’s 14 percent, tomorrow’s data will show. Shipments abroad gained 10 percent in March. An “astounding” 92.9 percent jump in exports to Hong Kong, the most in 18 years, raises questions on data quality, researcher IHS Inc. said.
“The April data could show if growth has accelerated in the current quarter and whether speculative capital inflows have ended,” Alaistair Chan, a Sydney-based economist for Moody’s Analytics, wrote in a report. “The mismatch between reported exports and reality explains some of the downside surprise in China’s first-quarter GDP numbers. April’s trade numbers could reset expectations.”
The government is due to report inflation data on May 9. Consumer prices gained 2.3 percent from a year earlier in April, below a government assumption for 2013 of 3.5 percent, following a 2.1 percent advance in March, according to the median estimate of economists surveyed by Bloomberg.
The yuan strengthened, rebounding following its biggest loss of 2013, as Premier Li Keqiang pledged to come up with a plan this year that would allow investment capital to move more freely in and out of China.
The proposal, part of the government efforts to loosen control over the currency and interest rates, will include a mechanism enabling individuals to invest overseas, the nation’s Cabinet said yesterday. The yuan rose 0.2 percent to 6.1537 per dollar as of 4:02 p.m. in Shanghai, according to the China Foreign Exchange Trade System.
The Hang Seng China Enterprises Index (HSCEI) advanced 0.3 percent today. The Bloomberg China-US 55 Index added 0.8 percent in New York yesterday, while the iShares FTSE China 25 Index Fund (FXI) climbed 0.5 percent.
-- Editors: Allen Wan, Chan Tien Hin
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