China Stocks Rise After Manufacturing Industry Grows

Chinese stocks rose, capping a weekly advance in the Shanghai Composite Index, as a gauge of manufacturing beat estimates and investors speculated policy makers may ease property curbs.

China Oilfield Services Ltd. and Yanzhou Coal Mining Co. paced gains among energy companies. China Merchants Bank Co. advanced 1.6 percent and Poly Real Estate Group Co. climbed for a third day. Inner Mongolia Yili Industrial Group Co., the dairy producer that surged to a record last month, retreated for a second day after profit growth trailed estimates.

The Shanghai Composite rose 0.4 percent to 2,149.56 at the close, extending this week’s gain to 0.8 percent. Financial shares led an afternoon rally on speculation the government will limit efforts to control the housing market, said Xu Shengjun, an analyst at Jianghai Securities Co. in Shanghai. China’s new home prices jumped by the most this year in October while the nation’s official gauge of manufacturing increased to an 18-month high, figures showed today.

“There is a lot of positive news today, including PMI, which should boost the index higher,” said Wei Wei, an analyst at West China Securities Co. in Shanghai.

The CSI 300 gained 0.5 percent to 2,384.96, while the Hang Seng China Enterprises Index increased 0.6 percent. The Shanghai gauge slid 1.5 percent in October, taking its annual decline to 5.6 percent. The index is valued at 8.5 times projected profits for the next 12 months, lower than the seven-year average of 15.4. Trading volumes in the measure were 37 percent below the 30-day average.

Manufacturing Data

China’s official manufacturing gauge rose as output strengthened, adding to evidence the nation’s economic recovery is sustaining momentum. A separate manufacturing gauge from HSBC Holdings Plc and Markit Economics climbed to 50.9 from 50.2, matching a preliminary reading. Levels above 50 signal expansion while those below point to a contraction.

The average new home price surged 10.7 percent last month from a year earlier to 10,685 yuan ($1,753) per square meter, SouFun Holdings Ltd., the nation’s biggest real estate website owner, said in a statement after a survey of 100 cities.

The Shanghai Stock Exchange Property Index advanced 1.2 percent, its third day of gains. Poly Real Estate rose 2 percent and Gemdale Corp. climbed 2.9 percent. China Merchants Bank extended this week’s gain to 2.8 percent.

Party Meeting

Top leaders of the ruling Communist Party gather this month to set a blueprint for social and economic policies to meet their goal of doubling per-capita income in the decade through 2020. Yu Zhengsheng, ranked fourth in the seven-member strong ruling Politburo Standing Committee, said last week the reforms will be “unprecedented and will promote profound changes in every area of the economy and society.”

The measures will involve breaking up state-owned enterprises, especially large central government-administered companies, the China Securities Journal reported, citing unidentified people. The plenum will run for four days through Nov. 12 in Beijing.

China Oilfield Services jumped 5.4 percent to the highest level since April 2011 after Credit Suisse Group AG said it favors the stock. Yanzhou Coal increased 1.2 percent.

Inner Mongolia Yili Industrial fell 4 percent. Ping An Securities cut its rating on the stock yesterday, citing a drop in third-quarter margins and profit that disappointed investors. Northeast Securities Co. also downgraded the shares.

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