China's Stocks Rise as New Economy Companies Jump; Citic Drops

  • Investors rotate to consumer, drug shares before trade data
  • Citic Securities slumps after two executives lose contact

China’s stocks rose for the fifth time in six days as health-care, technology and consumer-discretionary companies rallied, overshadowing declines for brokerages after Citic Securities Co. said it has been unable to contact two executives.

The Shanghai Composite Index added 0.3 percent to 3,536.93 at the close as trading volumes slumped 35 percent from the 30-day average. China will cut the trading hours for stock-index futures contracts and introduce a circuit-breaker mechanism from January, the government announced Friday. Citic Securities fell 1.9 percent after it said two members of its eight-person executive committee, its highest decision-making body, can’t be reached.

President Xi Jinping’s government is trying to boost the role of privately owned technology and service businesses, while downsizing state-run industrial and financial giants. Official data show the growing importance of service industries, which make up more than half the economy and expanded at a 8.4 percent pace in the first nine months of 2015.

“The market is betting on the new-economy stocks and believes that these companies have pretty good growth potential amid China’s economic transition,” said Wu Kan, who is keeping his stock holdings unchanged as a fund manager at JK Life Insurance Co. in Shanghai.

Trade Data

China will start to release economic data for November from this week with a trade report on Tuesday. Exports probably fell 5 percent from a year earlier, according to the median estimate of a Bloomberg survey. That compared with a 6.9 percent decrease a month earlier.

The CSI 300 Index gained 0.3 percent. Hong Kong’s Hang Seng China Enterprises Index fell 0.4 percent, while the Hang Seng Index slipped 0.2 percent.

Gauges of health-care, consumer-discretionary and technology shares led the advance in the CSI 300, climbing at least 0.9 percent. Chinese traditional medicine maker Beijing Tongrentang Co. jumped by the 10 percent daily limit. Huayi Brothers Media Corp., China’s biggest listed film maker, gained 5.9 percent, while Wangsu Science & Technology Co. added 2.7 percent.

About two-thirds of the 54 companies in Bloomberg’s index of U.S.-traded Chinese equities that have reported quarterly earnings since July exceeded analysts’ projections. Approximately three-quarters of the gauge’s members are technology and consumer-discretionary stocks. At the same time, more than half of 73 members of the MSCI China Index, which is heavily weighted with industrial and financial shares, missed earnings estimates.

Citic Probe

A measure of financial stocks fell 0.5 percent for the biggest decline. GF Securities Co. dropped 2 percent and Everbright Securities Co. slid 2.6 percent.

Chen Jun, head of Citic Securities’ investment-banking business, and Yan Jianlin, who heads investment banking at its international unit, can’t be reached, the company said in an exchange filing on Sunday. Should their involvement with the market probes be confirmed, it would bring to at least 10 the number of Citic Securities executives including President Cheng Boming implicated in the investigations to determine the causes of the stock plunge that wiped out $5 trillion of market value.

China will cut the trading hours for stock-index futures contracts after a government campaign to prevent bearish wagers sparked a record collapse in volumes.

New Rules

Instead of starting from 9:15 a.m., trading in the morning will begin from 9:25 a.m., in line with the cash market, while the afternoon session will end at 3 p.m., 15 minutes earlier than the current time, the China Financial Futures Exchange said in statement on Friday. The change will affect futures contracts linked to the CSI 300, CSI Smallcap 500 Index and the Shanghai Stock Exchange 50 A-Share Index.

China will start a stock-market circuit breaker to help calm volatility after the summer rout sent price swings in the benchmark index to 18-year highs. A move of 5 percent in the CSI 300 would trigger a 15-minute halt for stocks, options and index futures, while a swing of 7 percent would stop trading for the remainder of the day, the Shanghai Stock Exchange said in a statement on Friday.

— With assistance by Shidong Zhang

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