China’s Stocks Cap Second Weekly Gain on Easing Policy Outlook

China’s stocks rose, sending the benchmark index to a second weekly gain, as lower-than-estimated credit data spurred speculation the government will further ease policies to support growth.

Air China Ltd. and China Southern Airlines Co. gained at least 2.1 percent on prospects for increased travel demand before the National Day holidays in October. Hollyland China Electronics Technology Corp. and Jolywood (Suzhou) Sunwatt Co. jumped 44 percent on their first day of trading. Shandong Jiangquan Industry Co. surged 10 percent after saying it would be a vehicle for a backdoor listing.

The Shanghai Composite Index rose 0.9 percent to 2,331.95 at the close, pushing the measure to a 0.2 percent gain this week. Aggregate financing missed analyst estimates, a report today showed, adding to recent weak data including declines in imports and producer prices last month and slowing money-supply growth. China is scheduled to release figures on factory output, fixed-asset investment and retail sales tomorrow.

“The August economic data won’t be good based on some leading indicators,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. in Shanghai, which oversees about $193 million. “The market will be pressured in the short term. But if the economy worsens, the government will release more targeted easing policies to support growth.”

The CSI 300 Index added 0.6 percent to 2,438.36. The Hang Seng China Enterprises Index was little changed. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.- listed Chinese companies, retreated 0.5 percent yesterday.

Holiday Travel

Air China, the nation’s largest international carrier, rose to the highest close since Feb. 20. China Southern, the biggest carrier by fleet size, added 3.4 percent. China Eastern Airlines Corp., the second-largest carrier, climbed 1.4 percent.

China’s travel rush will start on Sept. 28, three days ahead of the National Day, and end on Oct. 7, the official Xinhua News Agency reported Sept. 10, citing China Railway Corp. The railway corp. expects 92.7 million railway trips to be taken during the weeklong holiday, Xinhua reported.

Shandong Jiangquan jumped 10 percent. Aesthetic Technology, a Beijing-based cosmetics maker, plans to list through the company, Shandong Jiangquan said in an exchange statement yesterday.

Aggregate financing was 957.4 billion yuan ($156 billion) in August, compared with the 1.135 trillion yuan median estimate. New local-currency loans were 702.5 billion yuan, versus the estimate of 700 billion yuan.

Rate Outlook

August’s aggregate financing, a measure of credit that includes bank lending, corporate bond issuance and shadow-banking products like entrusted loans, compared with 1.584 trillion yuan a year earlier. The slowdown in M2 growth to 12.8 percent was flagged by Premier Li Keqiang on Sept. 9.

Industrial output probably rose 8.8 percent from a year earlier, slowing from a 9 percent expansion in July, according to the median estimate of a Bloomberg survey. Retail sales likely expanded 12.1 percent while fixed-asset investment gained 16.9 percent in the January-to-August period, surveys showed.

Conditions for a nationwide interest-rate cut are not ripe, according to a front-page commentary published in the China Securities Journal, citing unidentified analysts. The government can expand targeted rate cuts, the newspaper said.

The Shanghai Composite is valued at 8.5 times 12-month projected earnings, the highest level since December, compared with a multiple of 7 for the H-shares gauge, according to data compiled by Bloomberg. Trading volumes in the index were 15 percent above the 30-day average today.

— With assistance by Shidong Zhang

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