Shanghai Composite Rebounds After Dropping Below 2,000 LevelWeiyi Lim
China’s stocks rebounded after the benchmark share index briefly fell below the 2,000 level as speculation grew that the government will take steps to bolster the economy. Consumer-discretionary companies led gains.
SAIC Motor Corp., the nation’s biggest automaker, jumped the most in three weeks and retailer Shanghai Friendship Group Inc. surged 10 percent to send a gauge of consumer companies most reliant on economic growth to the biggest advance among industry groups. Ping An Insurance, the No. 2 life insurer, climbed the most in two weeks after first-quarter profit surged 46 percent on contributions from its banking unit.
The Shanghai Composite Index rose 0.8 percent to 2,020.34 at the close. The index jumped at 2 p.m. local time after dropping below the 2,000 level for the first time since March 20. China is studying a Yangtze river economic belt plan to link the eastern, central and western regions, the government said in a statement, citing a meeting chaired by Premier Li Keqiang in Chongqing. The economic belt can help boost consumption and promote stable economic growth, Li said.
“There’s strong support at the 2,000 level,” Zhang Haidong, an analyst at Tebon Securities Co., said by telephone in Shanghai. “Premier Li’s speech about the Yangtze River economic belt also had some positive effects.”
Trading volumes in the Shanghai index were 31 percent below the 30-day average, according to data compiled by Bloomberg. China’s financial markets will close for a two-day holiday on May 1 and 2.
The CSI 300 Index rose 1.1 percent, while the Shenzhen-listed ChiNext gained 0.7 percent. The Hang Seng China Enterprises Index advanced 0.2 percent. The Bloomberg China-US 55 Index slid 1 percent in New York.
A measure of consumer-discretionary shares in the CSI 300 added 2.1 percent, the biggest gain since April 8. SAIC Motor advanced 3.1 percent. Gree Electric Appliances Inc. rose 4.2 percent. Shanghai Friendship surged by the daily limit.
Ping An Insurance gained 2.6 percent after first-quarter net income increased to 10.8 billion yuan ($1.7 billion), from 7.39 billion yuan a year earlier. A 41 percent profit increase at the banking unit helped Ping An bolster profit even as declines in the Shanghai Composite reduced the value in its equity holdings.
The Shanghai Composite has dropped 4.5 percent this year amid concern slowing economic growth will curb earnings. Of the 881 companies in the index, 680 have reported first-quarter earnings, according to data compiled by Bloomberg. Of those companies whose earnings Bloomberg compiled, 54 percent have reported profit that trailed analysts’ estimates.
China Petroleum and Chemical Corp., the biggest Chinese refiner known as Sinopec, slid 1 percent after first-quarter profit declined 15 percent to 14.1 billion yuan. China Vanke Co.. the largest developer, fell 0.4 percent after saying net income dropped 5 percent to 1.53 billion yuan.
Thirty of 31 provinces and municipalities failed to meet their growth targets in the first quarter even after scaling back their ambitions as the government instructs officials to focus on reining in debt and curbing pollution.
In Hebei, where the government is cutting steel capacity, growth was 4.2 percent, compared with a target of 8 percent. The province surrounding Beijing is the country’s biggest steelmaker, accounting for about a quarter of national output last year, and its cities are shrouded in smog.
The Shanghai measure is valued at 7.5 times 12-month projected earnings, compared with the five-year average multiple of 11.9.