Most China Stocks Rise as Consumer Gains Overshadow Banks

Most Chinese stocks rose as flat-panel television maker Hisense Electric Co. led appliance stocks higher after reporting a jump in profit. Banks declined on concern lending growth will slow.

Liquor maker Kweichow Moutai Co. advanced to a one-month high higher before the release of first-quarter earnings today. Hisense surged 7 percent after first-quarter profit climbed 56 percent. Hangzhou Hikvision Digital Technology Co. jumped 2.4 percent after Fortune CLSA Securities Ltd. said the company was a top pick, along with Moutai. China Minsheng Banking Corp. slid 2.8 percent as the China Securities Journal said new lending may drop to 800 billion yuan ($129.4 billion) this month.

About five stocks gained for every four that fell on the Shanghai Composite Index, which slipped 0.1 percent to 2,193.80 at the close. The CSI 300 Index fell 0.1 percent to 2,458.47. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong retreated 0.3 percent.

“Consumer stocks gained as they have the most growth potential with the government putting great efforts to bolster the industry,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million. “China’s banks will suffer from falling demand for loans as the old growth model of relying on investment cannot be sustained.”

Moutai Earnings

The Shanghai Composite has fallen 9.8 percent from a Feb. 6 high amid concern measure to cool property prices will hurt economic growth. Valuations on the gauge dropped to 9 times projected 12-month earnings today, near the lowest level since Dec. 13 and less than the seven-year average of 15.8, data compiled by Bloomberg show.

Trading volumes in the Shanghai index were 32 percent lower than the 30-day average today, according to data compiled by Bloomberg. Thirty-day volatility on the gauge was at 15.6, the lowest level since Dec. 4, the data showed.

A gauge of consumer-staples producers in the CSI 300 rose 2.4 percent, the biggest gain after technology companies. The latter jumped 2.6 percent.

Moutai, the biggest maker of baijiu liquor, rose 3.1 percent to 178.49 yuan, paring its loss this year to 15 percent amid concern a government crackdown on extravagant spending will curb demand for high-priced alcohol. The stock closed at its highest level since March 14.

Moutai’s first-quarter earnings per share may rise 20 percent from a year earlier to 3.43 yuan, according to the median estimate of five analysts surveyed by Bloomberg.

Hisense Electric jumped 7 percent to 14.98 yuan after profits increased. GD Midea Holding Co., the second-largest home-appliance maker, advanced 2 percent to 13.98 yuan.

1Q Earnings

Listed companies are required to release first-quarter earnings reports by the end of the month. Everbright Securities Co. will join Kweichow Moutai and Chongqing Changan Automobile Co. in reporting earnings after the market closes.

Hangzhou Hikvision, a maker of video-surveillance products, added 2.4 percent to 37.61 yuan. CLSA said it was “most confident” of technology companies in terms of reporting earnings that will match or beat analysts’ estimates.

Chinese A-share companies’ earnings may have a “gloomy start” to the year, with machinery, retail and environmental shares likely to disappoint, CLSA said. The brokerage has an overweight allocation on health-care companies, technology stocks and consumer shares and named Gree Electric Appliances Inc. and Yunnan Baiyao Group Co. among top picks.

Less Lending

A gauge of financial stocks in the CSI 300 slid 0.9 percent, the most among 10 industry groups. Minsheng Banking led losses for lenders, falling 2.8 percent to 9.25 yuan. Industrial Bank Co. declined 1.7 percent to 16.99 yuan.

New loans may be 800 billion yuan ($129.4 billion) this month, the China Securities Journal reported today, citing Shenyin & Wanguo Securities Co. New lending was 1.06 trillion yuan in March, according to the central bank.

Foreign investors may continue to short Chinese banks in the near term, the China Securities Journal reported, citing an unidentified person from the private equity industry.

The International Monetary Fund cut China’s growth forecast for this year yesterday to 8 percent from 8.2 percent. The lender reduced its global economic growth projection to 3.3 percent, from a January prediction of 3.5 percent.

China’s statistics bureau is schedule to release March property prices tomorrow. New home prices posted the broadest advance since December 2011 in February.

The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, added 1.8 percent in New York yesterday. U.S. stocks rose after gold prices rebounded and earnings from Coca-Cola Co. to Johnson & Johnson topped estimates.

— With assistance by Shidong Zhang

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