China Stocks Advance Most in a Month as Developers Lead Gains

  • Evergrande interest in Vanke, Langfang boost shares: JK Life
  • China Film extends gains to 91% following debut this week

China Stability Falters on Factory Output, Investment

Chinese stocks rallied the most in a month as stake purchases by China Evergrande Group fueled optimism that the pace of merger activity in the property industry will accelerate.

The Shanghai Composite Index closed 1.6 percent higher, with almost all the gains coming after the midday break. The benchmark gauge of real estate companies surged 4.7 percent, the most since March 2, as Langfang Development Co. and China Vanke Co., both targets of billionaire Hui Ka Yan’s Evergrande, jumped by the daily 10 percent limit.

Evergrande, which boosted its stake in Langfang to 15 percent in the past four months, plans to further increase its holdings and doesn’t exclude the possibility of obtaining actual control of the firm, Langfang said Wednesday. Evergrande bought a 5 percent stake in Vanke, the nation’s largest residential developer, earlier this month.

“The whole property sector is rising as investors are speculating that other companies in the sector will also become the takeover targets following the cases of Vanke and Langfang," said Wu Kan, a fund manager at JK Life Insurance Co. in Shanghai. “The market is now finding a new hot play.”

The Shanghai Composite ended the day at 3,050.67. The Shenzhen Composite Index rose 1.2 percent, while the ChiNext gauge of small-cap companies added 1 percent. Poly Real Estate Group Co. climbed 7.7 percent in Shanghai and Gemdale Corp. surged by the 10 percent daily limit. Greenland Holdings Group Corp. jumped 10 percent.

China Film Co., the nation’s largest distributor of movies, jumped by the 10 percent limit in Shanghai. The stock has surged 91 percent following its debut this week, pushing its market value to $4.8 billion and making it bigger than the likes of DreamWorks Animation SKG and Lions Gate Entertainment Corp.

China’s broadest measure of new credit increased less than expected. Aggregate financing was 487.9 billion yuan ($73.4 billion) in July, compared with the median estimate of 1 trillion yuan in a Bloomberg survey of economists. New yuan loans were at 463.6 billion yuan, versus a projected 850 billion yuan, People’s Bank of China data showed Friday after close of markets.

— With assistance by Shidong Zhang

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