China Stocks Rise to Three-Month High as Technology Shares Gain

  • Equity rebound to continue in short-term, Credit Suisse says
  • H-shares drop for second day after entering bull market

Chinese stocks advanced to a three-month high, led by technology and consumer-discretionary companies, as investors took heart from signs the world’s second-largest economy is stabilizing.

The Shanghai Composite Index gained 1.5 percent, climbing for a fourth day, as trading resumed after Monday’s holiday. Hundsun Technologies Inc. surged by the day’s limit as a gauge of technology shares increased the most among industry groups. PetroChina Co. paced losses for Chinese shares in Hong Kong as crude retreated for a third day. The premium that A shares have over their counterparts in Hong Kong rose to the highest level in six weeks.

The Shanghai measure capped its longest streak of weekly gains since October amid signs China’s economy and currency are stabilizing. An official factory gauge last week showed improving conditions for the first time in eight months, suggesting the government’s fiscal and monetary stimulus is kicking in. The stocks rebound will continue for another month or two, according to Credit Suisse Group AG.

“The A-share market follows a global equity rebound,” Li Chen, a strategist at Credit Suisse, said at a media briefing in Hong Kong. “And we have seen early signs of economic stabilization in China” judging from increases in steel prices, infrastructure investments and property sales in March, he said.

The Shanghai equity measure rose to 3,053.07 at the close, after falling 0.5 percent earlier. Trading volumes were 16 percent above the 30-day average. The Hang Seng China AH Premium Index climbed to 139.72, the highest level since Feb. 24.

The CSI 300 Index added 1.3 percent, with all 10 industry groups advancing. A measure of technology companies increased 2.7 percent, as Hundsun Technologies and Neusoft Corp. surged 10 percent. Appliance-maker TCL Corp. advanced 2.4 percent in Shenzhen to pace gains for consumer-discretionary shares.

The Hang Seng China index slid 1.9 percent after the measure entered a bull market last week. PetroChina sank 4.1 percent in Hong Kong as oil futures slid as much as 1.2 percent in New York before U.S. government data forecast to show that increasing crude stockpiles kept supplies at the highest level in more than eight decades.

Airlines extended gains on lower oil prices, with Air China Ltd. jumping 3.5 percent in Shanghai to take its four-day surge to 11 percent. China Southern Airlines Co. gained 2.5 percent, while China Eastern Airlines Corp. advanced 1.5 percent.

Economic Surprises

China’s manufacturing purchasing managers’ index rose to 50.2 in March, signaling an expansion as compared with expectations for a contraction in a Bloomberg survey of economists. Top officials at the National People’s Congress last month unveiled a record fiscal deficit and pledged to accelerate restructuring of bloated state-owned industries to meet their 6.5 percent to 7 percent expansion target for this year. Monetary authorities have flagged more room to act if growth falters.

“The A-share market still has room for a rebound,” said Linus Yip, a Hong Kong-based strategist at First Shanghai Securities Ltd. “It’s doing well because economic indicators are turning more positive.”

The Shanghai gauge has dropped 14 percent this year and is still among the world’s worst-performing stock benchmarks. The nation’s economic surprises are increasingly driving global stock-market returns, underscoring the need for clear and timely communication by the Communist Party, according to the International Monetary Fund.

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