China’s Stocks Rise on Manufacturing Data, Posting Annual Gain

China’s stocks rose, capping the benchmark index’s first annual gain in three years, after manufacturing expanded at a faster pace and regulators said they planned to allow more companies to set up mutual funds.

SAIC Motor Corp., China’s largest carmaker, led industrial companies higher after the Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics rose in December to the highest level since May 2011. Citic Securities Co. and China Life Insurance Co. rallied after the China Securities Regulatory Commission said brokerages and insurers would be able to manage mutual funds. Poly Real Estate Group Co. added 3.3 percent after the China Business News said property transactions in Shanghai rose to a 23-month high in December.

“The PMI figure further indicates a strong footing of the economy and the market will get more fundamental support,” said Wei Wei, an analyst at West China Securities Co. in Shanghai.

The Shanghai Composite Index climbed 1.6 percent to 2,269.13 at the close, its highest close since June 20. The CSI 300 Index rose 1.7 percent to 2,522.95. The Hang Seng China Enterprises Index added 0.5 percent. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, fell 0.1 percent in New York on Dec. 28. China’s markets will be shut from tomorrow to Jan. 3 for holidays.

The Shanghai Composite climbed 3.2 percent in 2012, its first annual advance since 2009. The gauge rebounded 16 percent since reaching an almost four-year low on Dec. 3 amid optimism China’s economic growth will recover. The CSI 300 advanced 7.6 percent this year while Hong Kong Hang Seng China Enterprises Index added 15 percent.

Factory Gauge

The 51.5 figure for the HSBC PMI compares with the 50.9 preliminary reading published Dec. 14 and 50.5 in November. A reading above 50 indicates expansion.

“Momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilize,” Qu Hongbin, chief China economist at HSBC in Hong Kong, said in a statement.

A separate, government-backed PMI probably rose to 51 in December from 50.6 the previous month, according to the median estimate in a Bloomberg News survey of 25 economists ahead of the report due tomorrow.

SAIC Motor advanced 3.2 percent to 17.64 yuan, its highest close since July 2011. BYD Co., the automaker part-owned by Warren Buffett’s Berkshire Hathaway Inc., advanced 5.3 percent to 20.35 yuan.

The Shanghai government announced on Dec. 28 it will subsidize buyers of hybrid cars with 30,000 yuan ($4,816) and electric cars with 40,000 yuan, the China Business News reported, citing a government document.

Trading Jumps

Trading volumes in the Shanghai Composite were 47 percent higher than the 30-day average today, according to data compiled by Bloomberg. The index trades at 11.1 times estimated earnings, the highest level in a year, according to weekly Bloomberg data.

Poly Real Estate, China’s second-largest developer by market value, gained 3.3 percent to 13.60 yuan. China Merchants Property Development Co., the third biggest, advanced 3.1 percent to 29.89 yuan. Gemdale Corp., the fourth largest, rose 4.2 percent to 7.02 yuan.

Property transactions in Shanghai totaled 1.1 million square meters in the first 30 days of December, the most in 23 months, the China Business News reported.

A measure of property companies in the Shanghai index jumped 38 percent this year, the biggest gain among the five groups, as real-estate sales rebounded even as the government maintained its restrictions to curb excessive price gains.

Citic Securities Co., China’s biggest listed brokerage, added 1.5 percent to 13.36 yuan. China Life, the nation’s biggest insurer, surged 5.8 percent to 21.40 yuan, its highest close since April 2011.

Brokerages Rally

Draft rules posted on the China Securities Regulatory Commission’s website yesterday showed companies wanting to set up mutual funds need to have at least 20 billion yuan in assets under management and demonstrate they have been profitable for the past three years.

A gauge of financial companies in the CSI 300 including brokerages rose 22 percent this year, the best performer among 10 industries, as regulators unveiled measures to allow brokerages to expand the scope of the businesses.

A sub-index of telecom stocks was the worst performer with an annual loss of 32 percent. ZTE Corp., China’s second-biggest phone-equipment maker, tumbled 42 percent this year after posting a third-quarter loss.

The 14-day relative strength measure for the Shanghai Composite, measuring how rapidly prices have advanced or dropped during a specified time period, gained to 76.25 today, the highest since November 2010. Readings above 70 indicate a price may be poised to fall.

Some 64.2 billion yuan of shares will become tradable this week as their lock-up periods expire, the most since mid-August, the official Xinhua News Agency reported yesterday, citing Zhang Gang, an analyst from Southwest Securities Co.