China’s Stocks Rise to 2-Week High, Led by Trade-Related Shares

China’s stocks rose to a two-week high as speculation that cities from Qingdao to Tianjin will win government approval for free-trade zones fueled rallies for port operators and logistics companies.

Tianjin Port Co., Tianjin Marine Shipping Co. and Tianjin Quanye Bazaar (Group) Co., a department store operator, all jumped 10 percent. Qingdao Kingking Applied Chemistry Co., a maker of wax products, also surged by the daily limit. Ningbo Port Co. gained 4.8 percent. ZTE Corp. led declines for phone companies, sliding 1.6 percent after reaching an 18-month high.

The Shanghai Composite Index climbed 0.6 percent to 2,211.77 at the close. The CSI 300 Index added 0.5 percent to 2,453.58. Gains in companies linked to the free-trade zone have fueled the Shanghai index’s rebound from a four-year low in June. Qingdao is planning a free-trade zone that will link China to Japan and South Korea, the commerce ministry said yesterday.

“The market is speculating there will be a second or third free-trade zone after Shanghai and port cities are the most likely candidates,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “Free-trade zones represent the direction of China’s deepening reforms, which will reduce the government’s intervention in economic activities.”

The Shanghai index has climbed 13 percent since June 27 as companies based in the city jumped on speculation they will benefit from deregulation in the free-trade zone. The measure trades at 8.8 times projected earnings for the next 12 months, compared with the five-year average of 12.6 times, according to data compiled Bloomberg.

Trade Zones

Tianjin Port jumped 10 percent to 8.17 yuan. Tianjin Quanye Bazaar (Group) Co., a department store operator, surged 10 percent to 5.52 yuan, rising by the daily cap for a second day. Tianjin Marine Shipping Co. climbed 10 percent to 5.61 yuan.

Tianjin, a port city southeast of Beijing, is awaiting approval from central government to set up a free-trade zone in the Dongjiang Bonded Port Area, Radio Television Hong Kong reported Sept. 30. China’s markets were shut for a week from Oct. 1 for the National Day holiday.

“The proposed free-trade zone in Tianjin is likely to give a significant boost to the local economy with several companies likely to benefit,” Gerry Alfonso, a trader at Shenyin & Wanguo Securities Co. in Shanghai, said by e-mail. “There are buy and hold opportunities in the sector but there is going to be some volatility.”

Qingdao Kingking jumped 10 percent to 8.87 yuan. Qingdao Doublestar Co., a maker of athletic footwear, surged 6.1 percent to 4.51 yuan.

Changan Auto

Qingdao’s free-trade plans include an international trade center, according to a statement on the website of the Ministry of Commerce.

Chongqing Changan Automobile Co., the partner of Ford Motor Co. and Mazda Motor Corp., advanced 4.6 percent to 10.98 yuan after saying sales rose 38 percent from a year earlier in September. The stock had its biggest gain in two months.

China’s economy has “strong momentum” as major economic indicators have rebounded since July, the Xinhua News Agency cited Premier Li Keqiang as saying in a written interview with media from Asean nations.

The government will start to release September economic data as early as this week. The central bank may release reports on money supply and new lending as early as today, while the customs office is scheduled to provide foreign-trade data on Oct. 12.

A measure of phone stocks in the CSI 300 slid 1.3 percent today, the biggest loss among the 10 industry groups. It rose to the highest since January 2012 yesterday after the government said it would bolster the development of industries related to fourth-generation mobile networks.

ZTE Drops

ZTE sank 1.6 percent to 17.81 yuan in Shenzhen. It rose to the highest close since March 2012 yesterday. China United Network Communications Ltd., which controls the nation’s second-largest cell phone operator, slid 1.1 percent to 3.57 yuan.

The Hang Seng China Enterprises Index dropped 0.4 percent today. Trading volumes in the Shanghai index were 9.4 percent lower than the 30-day average, according to data compiled by Bloomberg.

The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, fell 2.1 percent in New York yesterday as concern grew that a deadlock among U.S. lawmakers over the debt limit could lead to a government default.

— With assistance by Shidong Zhang

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