China Stocks Rise on Faster Economic Growth, Capping Weekly Gain

China’s stocks rose, capping the benchmark index’s biggest weekly gain this year, after data showed the economy accelerated for the first time in two years.

Gree Electric Appliances Inc. and SAIC Motor Corp., the largest Chinese makers of air-conditioners and autos, jumped more than 4 percent, leading an advance for companies reliant on growth in the economy. Poly Real Estate Group Co., the second-biggest Chinese developer, surged 5.5 percent after a report showed home prices rose in more cities last month. Beijing Tongrentang Co. led a gauge of health-care companies to the biggest gain among 10 industry groups this week.

“Economic growth is stabilizing and will pick up in the first quarter,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “The rally we’ve seen over the past month has reflected expectations of an economic recovery.”

The Shanghai Composite Index advanced 1.4 percent to 2,317.07 at the close, extending this week’s gain to 3.3 percent. The CSI 300 Index added 1.7 percent to 2,595.44. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong jumped 1.9 percent. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, added 0.1 percent in New York yesterday.

Chinese stocks have rallied since approaching four-year lows on Dec. 3 on signs of an economic recovery and speculation urban development would increase construction activity. The Shanghai Composite has risen 18 percent, while the CSI 300 has advanced 23 percent, entering a bull market.

Economic Data

Average trading volumes in the Shanghai index were 7.1 percent higher than the 30-day average today. Thirty-day volatility was at 20.5, compared with last year’s average of 17.1. The Shanghai Composite trades at 9.8 times earnings for the next 12 months, near the highest level since May, according to daily data compiled by Bloomberg.

China’s economic growth accelerated more than estimated in the fourth quarter, with industrial output picking up, after the government implemented policies to revive domestic demand as export growth slumped.

The fourth-quarter growth rate of 7.9 percent compared with the median estimate of 7.8 percent in a Bloomberg News survey of 53 analysts. The economy grew 7.8 percent last year, the National Bureau of Statistics said. That compared with the median estimate of 7.7 percent growth.

Industrial production rose 10.3 percent in December from a year earlier, compared with the 10.2 percent median forecast of 44 analysts. Retail sales in December rose 15.2 percent from a year earlier. The forecast was for an increase of 15.1 percent.

‘Cyclical Recovery’

“China is in a cyclical recovery and we can see that the recovery will continue into the first and second quarters, but what happens after that is quite uncertain,” said Yao Wei, China economist with Societe Generale SA. Yao is ranked by Bloomberg as the most accurate forecaster for quarterly GDP.

A gauge of consumer-discretionary companies in the CSI 300 rose 3.3 percent, the most among 10 industry groups. Gree Electric surged 6.4 percent to 28.30 yuan after saying in a preliminary earnings statement that profit rose 41 percent last year. SAIC Motor advanced 4.7 percent to 17.09 yuan. Great Wall Motor Co., China’s biggest pickup truck maker, rose 3.2 percent to 26.26 yuan.

Poly Real Estate led gains for developers, adding 5.5 percent to 14.29 yuan. China Merchants Property Development Co., the third biggest, gained 5.9 percent to 30.91 yuan.

Home Prices

New home prices climbed in 54 of the 70 cities the government tracks, compared with 53 in November, according to data from the statistics bureau. Prices fell in eight cities, the data showed. In April 2011, prices increased in 56 cities.

A measure of health-care stocks in the CSI 300 rose 0.9 percent, adding to an 8.6 percent jump this week on speculation demand for drugs will increase. Beijing Tongrentang rose 2.6 percent to 20.61 yuan, capping a 9.4 percent gain for the week. Huadong Medicine Co. added 3 percent to 38.85 yuan.

Four people died from influenza over the past two weeks in Beijing, the Xinhua News Agency reported today, citing the city’s disease control authorities. “Health stocks are boosted by concerns about the H1N1 flu,” Zhang Lei, an analyst at Minsheng Securities Co., said by phone from Beijing on Jan. 16.

Wuliangye Yibin Co. dropped for a fifth day, losing 1.9 percent to 27.58 yuan. The second-biggest maker of baijiu liquor will cancel policies that don’t conform with China’s anti-trust laws and rectify the situation after a government investigation, according to a statement on its website yesterday. China Business News reported on Jan. 8 that Wuliangye penalized retailers that lowered prices.

Kweichow Moutai Co., the biggest maker of baijiu, slid 0.7 percent to 203.76 yuan. The company said Jan. 15 it canceled a policy that punished retailers which cut prices.

Before it's here, it's on the Bloomberg Terminal.