China Stocks Climb to One-Month High as Railway Companies Surge
China’s benchmark stock index rose to a one-month high as railway companies surged on speculation they may help build Thailand’s high-speed train system, offsetting data showing lower exports and faster inflation.
CSR Corp. (601766) and China CNR Corp. (601299), the nation’s biggest train makers, jumped by the 10 percent daily limit. China Vanke Co. (000002) and Poly Real Estate Group Co. (600048) slid at least 2.5 percent after the China Securities Journal said the government may accelerate the establishment of long-term controls on the property market.
The Shanghai Composite Index (SHCOMP) advanced 0.4 percent to 2,237.77 at the close, the highest level since Sept. 12. Thailand’s prime minister said China showed interest in developing the Southeast Asian country’s high-speed train system. China’s consumer prices rose 3.1 percent in September, exceeding the median estimate in a Bloomberg survey, while exports unexpectedly fell 0.3 percent.
“It’s an event-driven sentiment on the railway stocks,” said Wu Kan, a Shanghai-based money manager at Dragon Life Insurance Co., which oversees $3.3 billion. “The government is now also adopting a ‘going out’ strategy for the railway industry to boost competitiveness.”
The Shanghai Composite has climbed 15 percent from its four-year low on June 27. The benchmark index trades at 8.9 times projected earnings for the next 12 months, compared with the five-year average of 12.6 times, data compiled by Bloomberg show. Trading volumes for index companies were 11 percent higher than the 30-day average today.
The CSI 300 Index added 0.2 percent to 2,472.54. Hong Kong’s exchange is shut for a holiday. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, rose 0.9 percent in New York on Oct. 11.
CSR and China CNR both rose to the highest level on a closing basis since June 3. China Railway Group Ltd. jumped 9.9 percent, the biggest gain since October 2010.
China Railway Construction Corp. (601186), builder of more than half the nation’s rail links since 1949, climbed 9 percent to 5.43 yuan after saying it won a project worth about 20 billion yuan ($3.27 billion) to build infrastructure and public projects on the southern island province of Hainan.
China showed interest in developing Thailand’s high-speed train system and Thailand wants to partially pay China with agricultural products, Prime Minister Yingluck Shinawatra told reporters after talks with Chinese Premier Li Keqiang in Bangkok on Oct. 11.
Vanke, the nation’s biggest listed property developer, fell 2.5 percent to 9.20 yuan. Poly Real Estate dropped 2.7 percent to 9.90 yuan, while China Merchants Property Development Co. (000024) slid 3.3 percent to 24.17 yuan.
The housing ministry will study property markets in cities such as Chengdu in the near term, signaling acceleration of the establishment of a system for long-term property controls, the China Securities Journal reported, citing unidentified people.
The 3.1 percent increase in China’s consumer price index compared with the 2.8 percent median estimate of 44 economists in a Bloomberg survey, after a 2.6 percent gain in August. The decline in the producer-price index narrowed to 1.3 percent from 1.6 percent the previous month.
The drop in China’s exports trailed all 46 estimates in a Bloomberg News survey, while imports rose a more-than-forecast 7.4 percent.
The government is scheduled to publish third-quarter gross domestic product figures on Oct. 18. The economy probably expanded 7.8 percent from a year earlier, according to a Bloomberg survey, up from the second quarter’s 7.5 percent pace. Money-supply and credit data for September from the People’s Bank of China are due today or tomorrow.
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at firstname.lastname@example.org