China Stocks Rise as Retailers, Developers Gain
China’s stocks rose the most in two weeks as retailers and property developers advanced on increased sales during a week-long holiday.
Beijing Wangfujing Department Store (Group) Co. (600859) jumped 2.8 percent to pace gains for consumer-discretionary companies. China Vanke Co. and Poly Real Estate Group Co., the nation’s biggest developers, advanced at least 4.6 percent. ZTE Corp. and China United Network Communications Ltd. led a rally for phone stocks after the government said it will boost development of industries related to a fourth-generation mobile network.
The Shanghai Composite Index (SHCOMP) added 1.1 percent to 2,198.20 at the close, the biggest gain since Sept. 23. China’s markets were shut from Oct. 1 through yesterday for the National Day holiday. Shanghai trading volumes were 13 percent below the 30-day average. The CSI 300 Index climbed 1.4 percent to 2,441.81.
“The sales figures during the holidays were good,” said Wu Kan, a Shanghai-based fund manager at Dragon Life Insurance Co., which oversees $3.3 billion. “That will add some confidence to economic growth, especially domestic consumption.”
The Hang Seng China Enterprises Index (HSCEI) added 0.8 percent today. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, fell 1.2 percent in New York yesterday.
The Shanghai Composite trades at 8.7 times projected earnings for the next 12 months, compared with the five-year average of 12.6 times, according to data compiled Bloomberg. The index climbed 9.9 percent last quarter, the biggest increase since the three months ended September 2010, as Shanghai-based companies jumped on speculation they will benefit from deregulation in the city’s free-trade zone.
The Shanghai Composite will probably extend its three-month rally as accelerating growth lifts valuations from the lowest level among major markets, according to Bocom International Holdings Co.
“Data flow on China during the holiday period has been positive,” Hao Hong, a Hong Kong-based strategist at Bocom International, a subsidiary of China’s fifth-biggest bank by market value, said in an e-mail interview yesterday. “Valuation is still cheap, especially relative to developed markets, and fundamentals are improving.”
China’s retail and catering combined sales grew 13.6 percent during the holiday from a year earlier to 870 billion yuan ($142 billion), according to a statement posted on the website of the Commerce Ministry.
A gauge of consumer-discretionary companies in the CSI 300 advanced 1.2 percent. Beijing Wangfujing, which operates department stores in the city, rose 2.8 percent to 21.94 yuan. Chongqing Department Store Co. jumped 4.6 percent to 24.79 yuan.
Qingdao Haier Co. (600690), the biggest refrigerator maker, gained 3.7 percent to 13.81 yuan after New York-based private-equity firm KKR & Co. agreed to buy a 10 percent stake in the company.
China Vanke led an advance for developers, surging 4.6 percent to 9.55 yuan, while Poly Real Estate rose 5.1 percent to 10.38 yuan.
Beijing’s new home sales from Oct. 1-6 almost doubled from a year earlier, China Securities Journal reported today, citing the municipality’s commission of housing and urban-rural development. Shanghai’s home sales during the Chinese holiday increased from a year ago, the reported cited unidentified industry participants as saying.
A gauge of China’s service industries dropped to 52.4 in September from 52.8 a month earlier, HSBC Holdings Plc and Markit Economics said in a statement today. A number more than 50 indicates an expansion. Another services report released by the statistics bureau on Oct. 3 showed an increase to 55.4 in September from 53.9 in August.
A measure of telecommunication stocks in the CSI 300 jumped 9.1 percent, the biggest gain among the industry groups.
ZTE, China’s second-biggest phone-equipment maker, advanced 9 percent to 18.09 yuan, the highest close since March 2012. China United, which controls the nation’s second-largest cell phone operator, surged 10 percent to 3.61 yuan.
China will aim to nurture large and key mobile internet companies related to the 4G industry, according to a statement posted on the National Development and Reform Commission’s website.
Neusoft Corp. (600718) jumped by the maximum daily 10 percent to 14.17 yuan. The company said it expected to win a computer information system qualification from the Ministry of Industry and Information Technology.
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at firstname.lastname@example.org