China Stocks Rise, Capping Monthly Gain as Property Shares Rally
China’s stocks rose, capping gains for the benchmark index this month, as real-estate developers, cement companies and household-appliance makers rallied on speculation the government may loosen property curbs.
China Vanke Co. (000002) and Poly Real Estate Group Co. advanced at least 2.8 percent, driving a gauge of developers to the biggest gain among industry groups. Anhui Conch Cement Co. (600585) climbed 1.5 percent and GD Midea Holding Co., the second-biggest appliance maker, surged 1.9 percent. Zhejiang Dahua Technology Co. tumbled 6.8 percent, dragging technology companies lower.
The Shanghai Composite Index (SHCOMP) rose 0.2 percent to 1,993.80 at the close. China will stabilize growth and promote the healthy and stable development of the real-estate market, the government said yesterday after a Politburo meeting. Investors had expected the nation’s highest-decision making body to say the government should maintain property restrictions, said Wei Wei, an analyst at West China Securities Co. in Shanghai.
“The Politburo didn’t mention any curb measures related to the property market and that sounds like the industry will see some loosening going forward,” said Wei. “The government may step up measures to bolster economic growth in the second half and new policy makers don’t want to see a big slump in economic growth.”
The Shanghai index gained 0.7 percent in July after plunging 14 percent last month. The CSI 300 Index rose 0.2 percent to 2,193.02 today, while the Hang Seng China Enterprises Index (HSCEI) lost 0.3 percent. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, added 0.7 percent in New York yesterday.
For the year, the Shanghai index is down 12 percent on concern slowing growth will damp earnings. The measure trades at 8.1 times 12-month projected profit, approaching the lowest level in at least five years, data compiled by Bloomberg show.
Authorities will maintain steady second-half expansion amid “extremely complicated domestic and international conditions,” the official Xinhua News Agency reported yesterday after a meeting led by President Xi Jinping. China will keep a prudent monetary policy and a proactive fiscal stance, Xinhua said.
The Shanghai Composite’s property index jumped 2.1 percent. Vanke, the nation’s biggest listed property developer, rose 2.8 percent to 9.52 yuan. Poly Real Estate, the second largest, added 3.2 percent to 10.19 yuan. China Merchants Property Development Co. (000024) climbed 4.5 percent to 26.91 yuan.
Property-related companies such as cement producers and appliance makers also rallied. Anhui Conch, China’s biggest cement maker, rose 1.5 percent to 14.46 yuan. Midea added 1.9 percent to 13.37 yuan.
“There could be some loosening (or at least no more tightening) of housing policies in the near term,” Jinsong Du, head of property research at Credit Suisse Group AG, wrote in an e-mailed response to questions.
Former Premier Wen Jiabao in March stepped up a three-year campaign to cool home prices, ordering the central bank to raise down-payment requirements for second mortgages in cities with excessive cost gains and telling local governments with the biggest price pressures to tighten home-purchase limits.
The statistics bureau is scheduled to release results of its official manufacturing index for July tomorrow. The reading is estimated to be 49.8, down from the previous month’s 50.1, according to the median estimate of 35 economists. A preliminary reading by HSBC and Markit’s Purchasing Managers Index last week was 47.7, below the 50 level that divides expansion and contraction.
China Life Insurance Co., the nation’s biggest insurer, added 1.6 percent to 13.26 yuan. The company attributed its estimated first-half 50 percent profit surge to an increase in investment income. The company posted a 26 percent drop in profit in the first half of 2012.
A measure of technology stocks slumped 1.5 percent, the most among the CSI 300’s 10 indexes. Even after today’s loss, it has advanced 26 percent this year. Zhejiang Dahua slid 6.8 percent to 37.92 yuan, the most since Jan. 4. Hangzhou HIK-Vision Digital Technology Co. (002415) fell 3.3 percent to 19.76 yuan.
Trading volumes in the Shanghai Composite were 27 percent lower than the 30-day average today while 30-day volatility was at 25.7, near the highest level since December 2010, according to data compiled by Bloomberg.
Four years after China’s growth helped lead the global economy out of a recession and won the admiration of luminaries from billionaire George Soros to Nobel laureate Joseph Stiglitz, the nation’s stock market has lost more money for investors than any other in the world.
The Shanghai Composite, which doubled in 10 months through August 2009 as the government poured $652 billion of stimulus into building roads, railways and housing, has tumbled 43 percent from its high, destroying $748 billion in market value. Only Greece’s ASE Index (ASE) has fallen more in percentage terms.
“The Beijing consensus as endorsed by some western observers as an alternative to the market economy is indeed a sham,” said Hao Hong, the Hong Kong-based head of China research at Bank of Communications Ltd., whose forecasts for stock losses have proved prescient. “Now we are all paying for it.”
--Zhang Shidong. Editors: Allen Wan, Darren Boey
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at email@example.com