China’s Stocks Climb for Second Day as Banks Shares Rise

China’s stocks rose for a second day as banks advanced amid near record-low valuations and information technology companies surged.

China Minsheng Banking Corp. and Huaxia Bank Co. gained at least 1.1 percent. Seven companies including Porton Fine Chemicals Ltd. and Netposa Technologies Ltd. were all suspended from trading after jumping by the 44 percent daily limit on their Shenzhen Stock Exchange debuts. Datong Coal Industry Co. declined 2.6 percent to a seven-year low after forecasting a loss for last year.

The Shanghai Composite Index climbed 0.6 percent to 2,049.91 at the close. The gauge has lost 3.1 percent this month, heading for the worst start to a year since January 2010. China’s markets will be shut from Jan. 31 to Feb. 6 for the lunar New Year holidays.

“The market will probably be stable ahead of the holidays,” said Wu Kan, a money manager at Dragon Life Insurance Co., which oversees about $3.3 billion. “Some investors are chasing low-valuation stocks for havens as the economy is still lackluster.”

The CSI 300 Index rose 0.4 percent to 2,227.78. The Hang Seng China Enterprises Index jumped 1.8 percent. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.- listed Chinese companies, added 1.5 percent in New York yesterday as Baidu Inc. surged.

Bank Valuations

The financial sub-index of the CSI 300 rose for a second day, adding 0.7 percent. The measure is valued at 5.7 times 12-month projected profits, the cheapest among 10 industry groups, data compiled by Bloomberg show. It traded at 5.5 times on Jan. 20, a record low. A gauge of information technology shares jumped 2.5 percent to the highest since Nov. 29

Trading volumes in the Shanghai index were 4.7 percent lower than the 30-day average today, according to data compiled by Bloomberg. The gauge is valued at 7.7 times forward earnings, compared with the five-year average multiple of 12.3, according to data compiled by Bloomberg.

Emerging-market stocks extended yesterday’s rally after Turkey and India raised interest rates, boosting confidence that central banks in developing nations will shore up their currencies and stem capital outflows. The MSCI Emerging Markets Index gained 1.5 percent today, heading for the largest advance since Nov. 18.

Minsheng Banking, the nation’s first privately owned bank, climbed 2.6 percent to 7.38 yuan. Huaxia Bank, partly owned by Deutsche Bank AG, gained 1.1 percent to 8.34 yuan.

IPO Reform

Trading in Porton Fine Chemicals and Netposa Technologies shares was suspended after they surged by the daily limit. Since the China Securities Regulatory Commission ended a more than year-long freeze on initial public offerings, 43 companies have listed shares in the Shanghai and Shenzhen exchanges. So far, the securities regulator has approved 52 companies for IPO sales.

The body will “proactively” move ahead with market-oriented IPO reform in the “proper way,” CSRC Chairman Xiao Gang said at a meeting on Jan. 27, according to a statement on the regulator’s website.

HSBC Holdings Plc and Markit Economics are due to release the January manufacturing Purchasing Managers’ Index tomorrow. The preliminary reading was 49.6, according to data released last week, signaling the first contraction in six months. A number above 50 indicates expansion. Official PMI data from the nation’s statistics bureau is due on Feb. 1.

ADR Rally

Datong Coal lost 2.6 percent to 4.85 yuan, the lowest close since Jan. 16, 2007. The company estimated a loss of between 1.35 billion yuan ($223.1 million) and 1.45 billion yuan for 2013 because of lower thermal coal prices, declining sales, higher transportation fees and lower production, according to a statement to the exchange.

Chinese stocks trading in New York rebounded yesterday as an accord between U.S. regulators and Deloitte Touche Tohmatsu CPA Ltd. eased concern that a ban on the Asian nation’s accounting firms would delay earnings reports.

Deloitte Touche Tohmatsu and the Securities & Exchange Commission agreed to end a lawsuit related to the China-based firm’s audits of Longtop Financial Technologies Ltd, according to a Jan. 27 filing.

Baidu, China’s biggest web search engine, rose the most in a month and online bookseller E-Commerce China Dangdang Inc. jumped 8.7 percent. TAL Education Group surged 15 percent, the most since 2011.

— With assistance by Shidong Zhang

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