China’s Stocks Rise Before Data; Technology, Steel Shares Climb

China’s stocks rose for a third time in four days before a report on manufacturing tomorrow. Steel and technology companies led gains, while energy producers fell.

Baoshan Iron & Steel Co., the listed unit of China’s second-biggest steelmaker, climbed 1.4 percent after raising prices for a second time in a month. Software maker Neusoft Corp. jumped 10 percent. China Shenhua Energy Co. and Anhui Conch Cement Co. led declines for coal and cement stocks. Ping An Bank Co. slumped 2.1 percent as technical indicators showed the stock was overbought after a 63 percent jump since Dec. 3.

The Shanghai Composite Index added 0.3 percent to 2,320.91 at the close. The measure changed direction at least five times before rising in the last 10 minutes of trading. Its 30-day volatility was at 20.3, near the 11-month high of 21.6 on Jan. 17. The index has risen 18 percent since approaching a four-year low on Dec. 3 amid signs of an economic recovery.

“After a very good performance over the past one month, it’s normal to see volatility,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “The economic recovery remains on a firm footing and the medium-term outlook for stocks is still optimistic.”

The CSI 300 Index gained 0.4 percent to 2,607.46 today, while the Hang Seng China Enterprises Index slid 0.7 percent. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, added 0.1 percent yesterday.

The Shanghai index is valued at 12.8 times reported profit, near the highest level since May, data compiled by Bloomberg show. Average trading volumes were 3.1 percent lower than the 30-day average today. Chinese stock accounts containing funds fell by about 77,000 to 54.9 million in week to Jan. 18, the lowest level since week to Nov. 12, 2010, according to regulatory data compiled by Bloomberg. Funded accounts slid for an eighth week, the longest losing streak since August.

Flash PMI

HSBC Holdings Plc and Markit Economics are due to release a preliminary manufacturing index for January tomorrow. The gauge may rise to 51.7 from 51.5 last month, according to the median estimate of 15 analysts in a Bloomberg survey. A reading above 50 indicates expansion.

A measure of technology stocks in the CSI 300 added 1.2 percent, the most among 10 industry groups. Neusoft, a software company, surged by the maximum daily limit to 8.60 yuan. The stock was rated buy in new coverage by Wu Huimin, an analyst at China International Capital Corp. on Jan. 21, according to data compiled by Bloomberg.

Baoshan Steel rose 1.4 percent to 5.04 yuan after the company raised prices for a second time in a month. Hebei Iron & Steel Co., the listed unit of the biggest, added 1.1 percent to 2.68 yuan. Angang Steel Co. gained 1.2 percent to 4.13 yuan.

Leading Index

Gauges of energy and industrial stocks retreated 0.5 percent and 0.1 percent respectively today for the biggest decliners among CSI 300’s 10 industry groups.

Shenhua, the nation’s largest coal producer, lost 1.1 percent to 24.12 yuan. Anhui Conch, China’s biggest cement maker, retreated 0.8 percent to 18.83 yuan.

Data today showed a leading index for China’s economy rose at a slower pace in December. A month-on-month gain in the Conference Board’s index slowed to 0.4 percent on sluggish real estate and export markets, according to a statement from the New York-based research group, citing a preliminary reading. That compared with a 1.1 percent advance the previous month.

Ping An Bank slid 2.1 percent to 20.05 yuan. The 14-day relative strength measure for the stock, measuring how rapidly prices have advanced or dropped during a specified time period, was at 87.1 yesterday. Readings above 70 indicate a price may be poised to fall.

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