China Stocks Rise Most This Week as Trade Unexpectedly Grows

Chinese stocks rose, sending the benchmark index to its biggest advance this week, after an unexpected increase in the nation’s trade in April eased concern about slowing growth in the world’s second-biggest economy.

Datong Coal Industry Co. and Shanxi Coal International Energy Group Co. jumped more than 9 percent to pace gains by energy producers. DHC Software Co. led declines among technology companies. Overseas shipments increased 0.9 percent last month from a year earlier, compared with the median estimate for a 3 percent drop in a Bloomberg survey of analysts, while imports rose 0.8 percent, official data showed.

The Shanghai Composite Index climbed 0.3 percent to 2,015.27 at the close. The stronger-than-expected figures are a result of a depreciating yuan and government efforts to boost trade amid weak domestic demand, according to Wu Kan, a fund manager at Shanghai-based Dragon Life Insurance Co., which oversees about $3.3 billion.

“The data will excite the market in the short term as the economy has signs of a recovery,” Wu said. “It looks like second-quarter data will be better than the previous one.”

The CSI 300 Index slipped 0.1 percent to 2,135.50. The Hang Seng China Enterprises Index rose 0.8 percent. The yuan gained 0.1 percent against the dollar, paring this year’s loss to 2.9 percent.

Exports to the U.S. jumped 12 percent from a year earlier, the most since November, based on customs data compiled by Bloomberg. Shipments to the European Union advanced 15.1 percent and those to South Korea were up 13.5 percent.

‘Obvious Improvement’

April exports have shown “obvious improvement,” Zheng Yuesheng, spokesman for the customs administration, said on state television today. “The external environment for China’s foreign trade is improving,” Zheng said. “The effects of an inflated comparison base in the same period last year are weakening.”

Imports compared with a median estimate for a 2.1 percent decline from analysts surveyed by Bloomberg News, with forecasts ranging from a drop of 11 percent to an increase of 5.8 percent. The trade surplus was projected to be $16.7 billion.

A gauge of energy stocks climbed 1.1 percent, the most among the CSI 300’s 10 industry groups and paring this year’s loss to 14 percent. Datong Coal advanced 9.9 percent, while Shanxi Coal jumped 10 percent, trimming its 2014 decline to 23 percent. China Coal Energy Co., the nation’s second-largest coal producer, added 1.7 percent.

Earnings Outlook

The Shanghai Composite has slumped 4.8 percent in 2014 and the Hang Seng China gauge lost 10 percent on speculation slowing economic growth will dent profits. China’s chief financial officers are less optimistic about earnings this year amid concerns about a slowing global economy, according to a regional survey by Bank of America Corp.

Although Chinese companies’ earnings posted a turnaround in 2013, they lost momentum by the first quarter, with core earnings declining by 2.7 percent, Bank of America wrote in a separate report. There will be more cuts in earnings estimates ahead given a lack of major stimulus and the “unsettled” shadow banking sector and property market, the bank said.

A measure tracking technology companies slid 1.3 percent for the biggest loss among the sub-indexes. DHC Software fell 5.6 percent. Shenzhen O-film Tech Co. retreated 4 percent.

The Bloomberg China-US 55 Index retreated 1 percent in New York yesterday. SouFun Holdings Ltd. which operates the country’s biggest real-estate information website, plunged 9.4 percent after saying revenue this year will probably trail analysts’ estimates.

A Centaline Group survey this week found home sales in 54 cities during the May 1 to May 3 holiday sank 47 percent from last year. Credit Suisse Group AG said banks may stop allowing home buyers to use personal loans for down payments.

The Shanghai index is valued at 7.5 times 12-month projected earnings, compared with the five-year average multiple of 11.9. Trading volumes in the measure were 23 percent below the 30-day average, according to data compiled by Bloomberg.