China’s Stocks Rally for Eighth Day to Highest Level Since 2008Bloomberg News
China’s stocks rose for an eighth day, sending the benchmark index to the highest level since 2008, as brokerages surged on speculation a rebound in trading will boost earnings and technology shares extended a week-long rally.
Citic Securities Co. and Haitong Securities Co., the nation’s two biggest listed securities firms, jumped at least 5 percent. Transaction volumes soared this week, while margin trading surged to all-time highs and new account openings rebounded to the highest since December. Ping An Insurance (Group) Co. advanced 3.5 percent after saying annual profit rose 40 percent and it plans to pay dividends and bonus shares. Dr. Peng Telecom & Media Group Co. jumped by the daily limit.
The Shanghai Composite Index climbed 1 percent to 3,617.32 at the close. The benchmark gauge rallied 7.3 percent this week, the most since Dec. 5, on speculation of further monetary easing after Premier Li Keqiang pledged to take action if economic growth slows too much.
“Lots of funds are coming back to the market so that’s benefiting brokerages,” said Wu Kan, a fund manager at Dragon Life Insurance Co. in Shanghai. “Technology stocks are now leading the run up as the government encourages innovation and technology upgrades to develop fledging industries. It’s still a bull market.”
The CSI 300 Index added 1.4 percent. Hong Kong’s Hang Seng China Enterprises Index rose 0.3 percent, while the Hang Seng Index slipped 0.3 percent. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, added 0.8 percent in New York on Thursday.
The Shanghai Composite has risen 12 percent this year, extending last year’s world-beating rally, amid speculation the central bank will cut interest rates or reserve-requirement ratios of lenders to ensure the government reaches its 7 percent growth target for this year.
The gauge is valued at 13.6 times 12-month projected earnings, compared with the five-year average of 10.2, according to data compiled by Bloomberg. Trading volumes were 72 percent higher than the 30-day average Friday.
A measure of financial stocks in the CSI 300 rose 3 percent for the biggest advance among 10 industry groups. Citic Securities jumped 9 percent, while Haitong Securities gained 5.9 percent. New stock account openings reached 721,544 last week, the fastest pace since Dec. 12.
The combined trading values on the Shanghai and Shenzhen stock exchanges surpassed 1 trillion yuan ($161.4 billion) for a fourth day, according to data compiled by Bloomberg. Turnover reached 1.15 trillion yuan on Friday, 7.3 percent shy of the record of 1.24 trillion yuan set on Dec. 9. Moreover, the outstanding balance of margin debt on the Shanghai exchange exceeded 900 billion yuan for the first time on Thursday. The balance rose 1.7 percent to 911.8 billion yuan, data showed.
“High volumes will likely help brokerages to maintain relatively high profit growth,” Shen Jun, a Shanghai-based analyst at BOC International, said by phone.
Ping An closed at the highest since Jan. 15. Net income climbed to 39.3 billion yuan last year, as stock-market rallies bolstered its investment returns and the insurer accelerated overseas property purchases. The insurer plans to pay a 5 yuan bonus and 10 bonus shares for every 10 stocks held, according to an exchange statement.
A sub-index of technology stocks in the CSI 300 advanced 2.4 percent. Aisino Co. surged 10 percent, while Yonyou Network Technology Co. added 1.3 percent.
The ChiNext index, dominated by technology companies, climbed 1.4 percent to a record high as Premier Li pledged to encourage investment in the industry to help wean the world’s second-largest economy from a reliance on heavy manufacturing and property development.
— With assistance by Shidong Zhang