China Stocks Rise to Post Longest Winning Streak in 3 WksWeiyi Lim
China’s stocks rose for a third day, capping the longest winning streak in three weeks, amid signs government efforts to arrest a slowdown are helping to stabilize the economy. Industrial companies led gains.
Shipbuilder China CSSC Holdings Ltd. paced an advance for industrial shares, surging 7.7 percent. China Shipbuilding Industry Co., the biggest equipment supplier for the navy, and China Avic Electronics Co. added at least 2.8 percent. China Enterprise Co. slid 1 percent, dragging down real-estate shares.
The Shanghai Composite Index rose 0.4 percent to 2,059.42 at the close. China’s Purchasing Managers’ Index grew at the fastest pace this year in June, yesterday’s data showed. The expansion in manufacturing comes after the government introduced mini-stimulus including infrastructure spending to prevent a property slowdown from endangering Premier Li Keqiang’s growth target for this year.
“PMI is just one of the many indicators that investors look at,” said Zhang Yanbing, an analyst at Zheshang Securities Co., said in Shanghai. “We need to bolster confidence. Without that, it’s hard for stocks to go higher even with positive news.”
The PMI was at 51 last month, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing. The figure matched analysts’ median estimate and increased from May’s 50.8. HSBC Holdings Plc and Markit Economics’ PMI rose to 50.7 from the previous month’s 49.4. Numbers above 50 signal expansion.
The CSI 300 Index advanced 0.3 percent. The Hang Seng China Enterprises Index gained 0.8 percent as markets in Hong Kong resumed trading after yesterday’s holiday to mark the 17th anniversary of Hong Kong’s return to Chinese sovereignty. The Bloomberg China-US Equity Index rose 1 percent yesterday.
A measure of industrial companies in the CSI 300 advanced 0.8 percent, the biggest gain among industry groups. China CSSC climbed the most in five months. China Shipbuilding advanced 3.2 percent. China Avic Electronics jumped 2.8 percent.
The nation’s military budget will rise 12.2 percent this year as spending focuses on high-technology weaponry and longer-reach naval and air capacity. The military is improving its training, doctrine, weapons and surveillance to be able to conduct more sophisticated attacks against the U.S. and others, according to a Pentagon report released last month.
A gauge of developers in the Shanghai index slid 0.4 percent, the only industry group to decline. China Enterprise fell the most since May 29. Gemdale Corp., which went ex-dividend, slid 0.9 percent.
In Hangzhou, where home prices fell the most in May among 70 Chinese cities watched by the government, Shanheng Real Estate Group is giving homebuyers an option to sell back their apartments in five years for 40 percent above the purchase price. In Wenzhou, DoThink Group is offering to repurchase homes at three of its projects for 120 percent of the purchase price after three years. Both cities are in eastern China.
The offers are the latest strategy by developers across China, including reducing prices, delaying project launches and offering incentives to potential buyers, as they seek to maintain sales targets.
“A number of key macro indicators have improved, but many others have not,” Credit Suisse analysts led by Andrew Garthwaite wrote in a report dated June 30. “Three areas have deteriorated: the job offer-to-applicant ratio is at an all-time high, producer prices are falling and above all, property prices are now falling.” Real estate accounts for a fifth of gross domestic product, they wrote.