Reforms Drive Longest Rally Since 2009: China Overnight

Chinese equities in New York rose for a fifth month, the longest advance in four years, after the government revealed the most sweeping reforms since the late 1990s. Giant Interactive Group Inc. led gains as LightInTheBox Holding Co. dropped the most since August.

The Bloomberg China-US Equity Index of the most-traded Chinese stocks in New York added 0.5 percent to 108.23, extending its increase in November to 5.6 percent. Giant, which develops online games, surged the most in five years this month after the company received a buyout offer, while online retailer LightInTheBox sank as its sales forecast trailed estimates. China Life Insurance Co., the country’s biggest insurer, gained the most since 2008.

The five-month rally in the Bloomberg China-US gauge erased a decline in the first half of 2013 and sent the gauge up 9.1 percent for the year. China vowed to allow more private investment in the state sector, loosen its one-child policy and better protect farmers’ rights in the most sweeping reforms in two decades. The government also pledged to elevate the role of markets in the world’s second-largest economy.

“The announced reforms were the catalyst and the market has been anticipating that for a couple of months,” Eric Brock, who helps oversee $4.4 billion as a portfolio manager at Clough Capital Partners, said in a phone interview yesterday. “Looking at the actions of the new administration in Beijing, it is clear that they are reformers in recognizing that the growth model in China needs to change quite significantly.”

Giant Gains

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., jumped 6.8 percent for the month to $40.13. The Standard & Poor’s 500 Index fell, erasing gains in the final half hour of a shortened trading session, as declines in phone and financial shares offset a rally in online retailers on Black Friday.

Shares of Shanghai-based Giant surged 27 percent this month to $11.23, the most since 2008. A consortium led by Giant’s Chairman Yuzhu Shi and Baring Private Equity Asia offered to purchase on Nov. 25 the company at $11.75 per American depositary receipt.

LightInTheBox dropped 23 percent to $7.10, the biggest drop since August. Fourth-quarter revenue will rise as much as 16 percent to $77 million, the company said in a statement on Nov. 18. That was below the $83.1 million mean estimate of four analysts compiled by Bloomberg.

China Life jumped 22 percent to $48.20, the most since April of 2008. China International Capital Corp. raised its rating on China Life’s H-shares to the equivalent of a buy from hold on Nov. 19, while HSBC Holdings Plc said Chinese insurers will outperform in 2014.

The Hang Seng China Enterprises Index in Hong Kong gained 7.7 percent this month to 11,441.27, the biggest gain for the index this year. The Shanghai Composite Index of domestic shares advanced 3.7 percent to 2,220.50.