Most Chinese Stocks Rise, Led by Wine Makers; Sany Drops

Most Chinese stocks rose as wine companies climbed after the government started an anti-dumping probe into European Union imports. Industrial companies fell as BNP Paribas SA said the slowing economy may hurt prospects.

Yantai Changyu Pioneer Wine Co. and Tonghua Grape Wine Co. jumped at least 6.2 percent as China announced an investigation on EU products after the regional group imposed tariffs on Chinese solar products. Citic Securities Co. gained on speculation a government plan to bolster the brokerage industry will increase earnings. Sany Heavy Industry Co., the biggest construction machinery company, dropped 1.1 percent after BNP Paribas advised an underweight allocation for industrial stocks.

About six stocks rose for every five that dropped on the Shanghai Composite Index, which slipped less than 0.1 percent to 2,270.93 at the close. The CSI 300 Index lost 0.2 percent to 2,560.54. The Hang Seng China Enterprises Index retreated 0.9 percent. The ChiNext index rose 0.6 percent. The Bloomberg China-US 55 Index slid 0.3 percent in New York yesterday.

“The economy is lackluster and there aren’t any drivers for stocks,” Wang Weijun, a strategist at Zheshang Securities Co., said in Shanghai. “Investors are waiting for first-half company earnings” from next month, he said.

China’s benchmark indexes have fallen over the past week on signs small businesses are struggling. The official Purchasing Managers’ Index for smaller companies slid in May, even as the broader gauge rose, while a PMI index from HSBC Holdings Plc and Markit Economics that includes small enterprises fell more than forecast to an eight-month low.

Anti-Dumping Probe

The Shanghai index’s trading volumes were 26 percent below the 30-day average today, while 30-day volatility was at 15.5, compared with this year’s average of 19.2, according to data compiled by Bloomberg. It trades at 9.2 times 12-month estimated earnings, compared with the seven-year average of 15.5 times, according to data compiled by Bloomberg. The measure gained 5.6 percent last month, the most since December.

Yantai Changyu, the listed unit of the country’s biggest vintner, jumped by the 10 percent daily limit to 44.44 yuan. Tonghua Grape Wine gained 6.2 percent to 11.86 yuan. Citic Guoan Vine Co. surged 10 percent to 5.61 yuan.

Commerce Ministry Spokesman Shen Danyang said China has started procedures for anti-dumping and anti-subsidy probes on EU wine, according to a statement posted on the ministry’s website. The move came after the EU decided yesterday to impose tariffs as high as 67.9 percent on solar panels from China.

Underweight Cyclicals

“It’s a signal,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. China had said in the past that “there will be consequences, so they have to back it up with action.”

Citic Securities Co., China’s biggest listed brokerage, added 1.1 percent to 12.88 yuan. Haitong Securities Co., the second largest, rose 0.9 percent to 11.80 yuan.

The nation is drafting a development plan for the securities industry that aims to grow it ten-fold, the newspaper said. Regulators may encourage brokerages to develop fixed-income and M&A financing businesses this year, it said.

A gauge of industrial companies in the CSI 300 dropped 0.5 percent, the second most among the 10 indexes. Sany Heavy fell 1.1 percent to 9.06 yuan. Jiangsu Zhongnan Construction Group Co. sank 5 percent to 10.85 yuan. Xiamen C & D Inc., an investment holding company, lost 4.7 percent to 7.58 yuan.

Investors should underweight Chinese domestic cyclical shares, particularly industrial and financial companies, as the country undergoes a structural slowdown, BNP analyst Manishi Raychaudhuri wrote in a report dated today.

The statistics bureau will release May industrial output, retail sales, and inflation data on June 9 along with fixed-asset investment for the first five months of the year. The customs administration will report May trade figures on June 8. A private manufacturing index of China’s service industry rose to 51.2 in May from 51.1 in April, HSBC and Markit said today.

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