China’s Stocks Rise to Four-Year High as Chalco Rallies With BYD

China’s benchmark stock index rose to the highest level since November 2010 as Aluminum Corp. of China Ltd. led a rally for metal companies on an asset restructuring plan and transport shares surged on lower oil prices.

Chalco, as Aluminum Corp. is known, jumped 10 percent on a plan to dispose of non-core assets. Air China Ltd. and China Shipping Development Co. both gained by the daily limit after crude slid to a five-year low. BYD Co. rebounded 14 percent in Hong Kong after the electric carmaker said it confirmed with shareholder Berkshire Hathaway Inc. that it has no intention to cut its stake. Technology and small-company stocks slid as money-market rates rose on the biggest new share sales in 2014.

The Shanghai Composite Index gained 1.7 percent to 3,108.60 at the close, extending this week’s advance to 5.8 percent. China, the largest crude oil importer globally, will benefit as every one percent drop in oil prices means $2.2 billion in savings and a boost in total net profit by 0.2 percent, Citigroup Inc. said in a report last month.

“The decrease in oil prices presents direct good news to airlines and shipping companies as energy expenditures make up a significant part of their operating costs,” said Dai Ming, a fund manager at Hengsheng Asset Management Co. in Shanghai. “The market is trending up at a measured pace now.”

The CSI 300 Index climbed 1.1 percent. Hong Kong’s Hang Seng China Enterprises Index advanced 0.6 percent. The Hang Seng Index gained 1.3 percent. The Bloomberg China-US Equity Index added 0.8 percent in New York yesterday.

Policy Speculation

The Shanghai index jumped as much as 2 percent today and dropped as much as 1.3 percent. Price swings have increased, with 30-day volatility surging to the highest level since November 2010 this week, as the index extended its world-beating rally over the past month to 27 percent.

Chinese shares have gained on speculation the central bank will reduce lenders’ reserve-requirement ratios after cutting interest rates for the first time in two years last month to support growth. For the year, the Shanghai gauge has soared 47 percent, sending valuations to 11.6 times 12-month projected earnings, the highest level in three years, according to data compiled by Bloomberg. The H-shares gauge has advanced 5.4 percent.

The People’s Bank of China extended short-term loans to commercial banks yesterday, said people familiar with the matter, as the central bank sought to boost liquidity with investors hoarding cash ahead of a series of share sales. The amount of the loans given to commercial banks wasn’t clear, according to the people, who asked not to be named because the move wasn’t made public.

Material Stocks

China revised the size of the economy by $308.8 billion, adding almost the entire output of Malaysia. The gross domestic product of the world’s second-largest economy was 58.8 trillion yuan ($9.5 trillion) in 2013, according to the results of a nationwide economic census announced today. That’s 3.4 percent larger than the previously reported figure.

Chalco surged 6.5 percent in Hong Kong for the biggest gain since Aug. 6. The biggest Chinese aluminum producer will sell stakes in four solar product units in Ningxia province through a public tender, according to a company statement. Chalco also said Xiong Weiping had resigned as chairman.

Jiangxi Copper Co., China’s biggest producer of the metal, gained 4.1 percent in Shanghai and gold producer Zijin Mining Group Co. added 3.4 percent.

BYD Gains

BYD, whose shares tumbled a record 29 percent yesterday in Hong Kong, reiterated comments that its operations are normal and that it has no substantial foreign exchange losses tied to its Russia business, according to a company filing. The level of support from the Chinese government for new-energy vehicles also hasn’t changed substantially, the company said. The shares rose 2.9 percent in Shenzhen today.

China Southern Airlines Co. gained 7.4 percent, while Cosco Shipping Co. rallied 10 percent. Crude oil dropped to the lowest level in more than five years on concern a supply glut will worsen. West Texas Intermediate for January delivery fell 4.2 percent to $54.11 a barrel in New York yesterday.

The ChiNext index of small-cap stocks, dominated by technology and drug shares, fell for a fourth day, sliding 2.3 percent. Huayi Brothers Media Corp. slid 4 percent, extending losses to 8.8 percent this week. Gauges of technology and health-care companies in the CSI 300 slid at least 1.2 percent for the biggest losses among 10 industry groups. Yonyou Software Co. dropped 2.8 percent.

Six companies including Guosen Securities Co. and Sinomine Resource Exploration Co. will market their initial public offering shares today following yesterday’s sales by Sunflower Pharmaceutical Group Co. Three more companies will do so next week and two in January. Investors will probably place as much as 3 trillion yuan of orders for the 12 IPOs, according to estimates by Shenyin & Wanguo Securities Co.

The benchmark seven-day repurchase rate, a gauge of interbank funding availability in the banking system, climbed 65 basis points, or 0.65 percentage points, to 5.93 percent in Shanghai. That’s the highest level since January.

— With assistance by Shidong Zhang

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