China Stocks Rise for Best Week Since March

China’s stocks posted their biggest weekly gain in five months, as marine companies rallied on speculation the government will allow more cities to have free-trade zones and China Cosco Holdings Co. posted a narrower loss.

Tianjin Port Co. and Wuhu Port Storage & Transportation Co. jumped by the 10 percent daily limit. China Cosco, the nation’s biggest shipping company, climbed the most in two months. Shandong Gold Mining Co. and coal producer Shanxi Lu’an Environmental Energy Development Co. led declines for commodity producers after oil and metals dropped on prospects military action against Syria won’t be imminent.

The Shanghai Composite Index rose 0.1 percent to 2,098.38 at the close, adding to a 2 percent gain this week. Investors speculated China will allow more cities besides Shanghai to start free-trade zones because the concept fits with Premier Li Keqiang’s drive to shift the economy toward services, according to Wu Kan, a Shanghai-based fund manager at Dragon Life Insurance Co., which oversees $3.3 billion.

“It’s a hot topic and the thematic investment will carry on,” Wu said.

The CSI 300 Index slipped 0.2 percent to 2,313.91 today, dragged down by technology companies. The Hang Seng China Enterprises Index fell 0.5 percent, while the ChiNext index of small companies plunged 3.4 percent. The Bloomberg China-US Equity Index fell 0.1 percent in New York yesterday.

The Shanghai index rallied 5.3 percent this month, the biggest gain among benchmark indexes in Asia, as reports ranging from industrial production to money supply signaled the economy is stabilizing. The positive economic data overshadowed Everbright Securities Co.’s Aug. 16 trading error that sparked the biggest intraday swing for stocks since 2009.

August PMI

The statistics bureau is scheduled to release results of its official manufacturing index for this month on Sept. 1. The reading is estimated to be 50.6, up from the previous month’s 50.3, according to the median estimate of 29 economists. A preliminary reading by HSBC Holdings Plc and Markit’s Purchasing Managers Index last week was 50.1, resuming expansion from July. The 50 level divides expansion and contraction.

Trading volumes in the Shanghai index were 64 percent higher than the 30-day average today, according to data compiled by Bloomberg. It’s valued at 8.4 times its projected 12-month earnings, compared with the five-year average of 12.7 times, according to data compiled by Bloomberg.

Tianjin Port surged 10 percent to 7.59 yuan, capping a 39 percent gain this week. Wuhu Port jumped 10 percent to 3.80 yuan. Chongqing Gangjiu Co., a port operator, climbed 10 percent to 7.77 yuan, adding to a 37 percent advance this week.

Trade Zones

Tianjin, a port city southeast of Beijing, submitted a plan to the commerce ministry last month, according to a July 10 report in the 21st Century Business Herald. Shanghai’s Free-Trade Zone, which was approved by the State Council in July, may open as early as the end of next month according to the Shanghai Securities News.

“Tianjin submitted an application to the State Council to set up a free-trade zone, similar to the one in Shanghai,” said Gerry Alfonso, a trader at Shenyin & Wanguo Securities Co. “It is likely that the authorities will approve that request. Investors are trying to build positions before there is an announcement.”

China Cosco climbed 5 percent to 3.18 yuan, its biggest gain since June 17. Its net loss in the six months to June was 990 million yuan ($162 million), compared with 4.87 billion yuan a year earlier, the company said yesterday.

Ping An Insurance (Group) Co., China’s second-biggest insurer, gained 3.2 percent to 34.86 yuan. The insurer said first-half profit rose 28 percent as investment income expanded and earnings from banking operations grew.

Military Tension

Of 219 Shanghai-listed companies that reported first-half earnings that Bloomberg tracks, 101 beat analyst estimates, 105 trailed and the rest were in line. China’s public traded companies are required to release first-half earnings by the end of the month.

Shandong Gold, China’s second-largest bullion producer by market value, lost 2.2 percent to 24.64 yuan. Zijin Mining Group Co., the biggest, fell 1.1 percent to 2.64 yuan. Shanxi Lu’an sank 2.4 percent to 12.85 yuan. PetroChina Co. extended losses to a third day, losing 1.1 percent to 7.83 yuan.

Gold retreated the most in more than two weeks and crude oil fell from a two-year high yesterday. Concern conflict with Syria will disrupt Middle East oil supplies eased as U.K. Prime Minister David Cameron failed to gain parliamentary backing for military action.

Chengdu Dr Peng Telecom & Media Group Co. led declines for technology companies, falling 10 percent to 15.30 yuan. A gauge of technology companies in the CSI 300 narrowed its gain for this year to 39 percent after posting the biggest loss among 10 industry groups today and this week.

(Corrects 10th paragraph to show State Council approved free-trade zone in July, not August.)
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