China Stocks Rise to 10-Week High on Li Confidence, Goldman View
China’s stocks rose to a 10-week high after Premier Li Keqiang said he’s confident the country will achieve this year’s economic goals and Goldman Sachs Group Inc. boosted its forecast for the nation’s expansion in 2013.
Industrial Bank Co. and Poly Real Estate Group Co. surged more than 4 percent to lead a rally for lenders and developers. Guangzhou Automobile Group Co. rose 2.8 percent, pacing a rally for consumer companies reliant on economic growth. Heilongjiang Agriculture Co. jumped 10 percent on speculation government reforms will boost the industry. Shanghai International Port (Group) Co. declined for the first time in eight days.
The Shanghai Composite Index (SHCOMP) rose 1.2 percent to 2,123.11 at the close, with a gauge of 30-day volatility falling to the lowest level since June 7. The Shanghai index rallied 5.3 percent last month, the biggest gain among benchmark indexes in Asia, on signs the economy is stabilizing. An official report released over the weekend showed a gauge of manufacturing climbing to a 16-month high in August. Data today showed a non-manufacturing purchasing managers’ index at 53.9 in August. A reading above 50 indicates expansion.
“August economic data has been great so there’s optimism such a trend will continue in the coming months,” Zhou Lin, an analyst at Huatai Securities Co., said by phone from Nanjing. “There are also expectations there will be more reforms that will boost the economy.”
The CSI 300 Index rose 1.5 percent to 2,354.50. The Hang Seng China Enterprises Index (HSCEI) advanced 1.6 percent.
Premier Li said confidence is increasing, according to a speech at the China-Asean forum broadcast on China Central Television. Recent data show employment and prices are stable and market expectations have “apparently” improved, Li said, adding to signs China will meet its 7.5 percent growth target.
Goldman Sachs raised its forecast for China’s economic growth this year to 7.6 percent from 7.4 percent, saying forward indicators picked up in the last few months amid improving global demand.
Property stocks rose the most among the five industry groups in the Shanghai Composite. Poly Real Estate, the second-biggest developer, added 4.6 percent to 10.67 yuan. Gemdale Corp. gained 4.5 percent to 6.51 yuan.
The financial sub-index in the CSI 300 rose 1.9 percent, the most among 10 industry groups. Industrial Bank led a rally for lenders, gaining 4.9 percent to 11.24 yuan. China Minsheng Banking Corp. advanced 2.2 percent to 9.31 yuan. Ping An Insurance (Group) Co. added 2.6 percent to 36.08 yuan.
A gauge of consumer-staples companies in the CSI 300 rose 1.8 percent, the second-most among 10 industry groups. Heilongjiang Agriculture jumped 10 percent to 9.02 yuan. Anhui Huilong Agricultural Means of Production Co. gained 10 percent to 7.45 yuan.
Chinese agriculture stocks rallied on speculation they will benefit from potential government land reforms, according to Zhang Gang, a strategist at Central China Securities in Shanghai. Policy makers, planners and government advisers are drafting proposals on how to implement Li’s urbanization vision that will be presented to the Communist Party’s top leaders at a meeting later this year.
Guangzhou Automobile surged for a second day after reporting a first-half profit of 1.22 billion yuan. The shares gained 2.8 percent to 8.56 yuan as CCB International Holding Ltd. upgraded the company to outperform from neutral.
Shanghai International Port declined 5.8 percent to 4.52 yuan. The shares had rallied 88 percent over seven days after the State Council approved the city’s plan for a free-trade zone. Wuhu Port Storage & Transportation Co., based in Anhui province, slid 6.1 percent to 3.21 yuan.
Guangdong province has also drafted a plan for a free-trade zone and will submit it to the State Council after a feasibility evaluation by the Ministry of Commerce’s study group, the 21st Century Business Herald reported yesterday, citing an unidentified person as saying.
Trading volumes in the Shanghai index were 28 percent higher than the 30-day average for this time of day, according to data compiled by Bloomberg. It’s valued at 8.5 times its projected 12-month earnings, compared with the five-year average of 12.6 times, according to data compiled by Bloomberg.
To contact the reporter on this story: Weiyi Lim in Singapore at firstname.lastname@example.org