China’s Stocks Rise as Health-Care Shares Rally Most Since 2010

Chinese stocks rose as a gauge of health-care companies rallied the most in more than two years on speculation the government is seeking to bolster the industry.

China Resources Double-Crane Pharmaceutical Co. surged 10 percent after the People’s Daily said the government plans to reduce the number of drug wholesalers. Suning Appliance Co., the biggest electronics retailer, jumped the most in a month after its board approved to a plan to start a domestic courier business. Ping An Bank Co. slid 2.5 percent, pacing declines by lenders amid speculation the government will take steps to cool the property market, curbing mortgage growth.

The Shanghai Composite Index gained 0.6 percent to 2,397.18 at the close, erasing a 0.5 percent decline. The advance follows a two-day, 2 percent drop. The CSI 300 Index added 0.6 percent to 2,702.64. The Hang Seng China Enterprises Index rose 0.8 percent. The Bloomberg China-US Equity Index slid 0.9 percent.

The People’s Daily report “signals streamlining of the health-care industry and we’ll see more action from the government to reform the industry,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million.

The Shanghai index has risen 22 percent from a three-year low on Dec. 3 on signs economic growth is accelerating. The gauge trades at 13.3 times reported profit, near the 13.4 times reach on Feb. 18, the highest level since September 2011, data compiled by Bloomberg show. Trading volumes were 16 percent below the 30-day average.

Drugmakers Rally

China aims to cut the number of drug wholesalers by 10,000 from the current 13,000 by raising entry barriers, the People’s Daily reported, citing Li Guoqing, an official at the State Food and Drug Administration.

An index of health-care companies rallied 4.7 percent, the biggest gain since Nov. 15, 2010. The gauge has jumped 21 percent this year, more than double any other industry group. The CSI 300 Healthcare Index trades at 32.4 times reported earnings, compared with the broader gauge’s multiple of 13.6. That’s the biggest premium since March 2010. Hualan Biological Engineering Inc. climbed 6.3 percent to 26.14 yuan. China Resources posted its biggest jump since August 2007.

Suning surged 3.7 percent to 7.06 yuan. The stock has risen 6.2 percent this year after plunging 21 percent in 2012 on concern over rising price competition after online retailer 360buy Jingdong Mall announced plans to cut prices.

Lenders Tumble

The CSI 300 Financials Index sank 6.1 percent the past five sessions, its biggest five-day retreat since September 2011. The gauge is still up 36 percent over the past three months, the most among 10 industry groups on the CSI 300.

Ping An Bank slid 2.5 percent to 20.30 yuan, paring its advance for the year to 26 percent. Shanghai Pudong Development Bank Co. slumped 2.6 percent to 10.81 yuan.

The government may increase borrowing costs and downpayment requirements for some home buyers, the Shanghai Daily reported, citing an unidentified banking official. The Shanghai Securities News said the Beijing municipal government will meet with developers tomorrow to discuss possible tightening policies. The paper cited an unidentified person from the local housing commission.

China’s inbound investment dropped 7.3 percent in January from a year earlier, the eighth straight month of declines, the government reported today. China’s economic data in the first two months are distorted by the timing of the weeklong Lunar New Year holiday, which fell in January last year and February this year.

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