Sept. 14 (Bloomberg) -- China’s stocks rose, snapping three days of losses by the benchmark index that drove valuations to a record low, as investors speculated declines were excessive.
China United Network Communications Ltd. rallied to a six- week high after Sinolink Securities Co. said the stock is “undervalued.” China Coal Energy Co., the nation’s second- largest coal producer, advanced 1.9 percent after boosting production. Anhui Conch Cement Co. fell 2.8 percent on concern demand for the material will slump after the Shanghai Securities News said home sales dropped in major cities.
“Stock valuations are already very low,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “Though concerns about slowing earnings and economic growth are still there, most of the pessimism should already be priced in now.”
The Shanghai Composite Index added 13.52 points, or 0.6 percent, to 2,484.83 at the 3 p.m. close, erasing earlier losses of 0.6 percent and halting a three-day, 1.8 percent decline. The CSI 300 Index gained 0.5 percent to 2,733.11.
The Shanghai gauge has slumped 12 percent this year, extending last year’s 14 percent plunge, as the government took steps to cool inflation that’s at an almost three-year high. The stock gauge is valued at 11.5 times estimated profit, the lowest on record, according to weekly data compiled by Bloomberg dating back to January 2006.
Inflation will moderate in the coming months and the country won’t see high inflation next year as it did in the first half of the year, central bank adviser Li Daokui said at the forum today.
Premier Wen Jiabao, facing calls to widen support for indebted European countries, signaled that developed nations should cut deficits and create jobs rather than relying on China to bail out the world economy.
“Countries must first put their own houses in order,” Wen said today at the World Economic Forum in Dalian, China. “Developed countries must take responsible fiscal and monetary policies. What is most important now is to prevent the further spread of the sovereign debt crisis in Europe.”
Greek Prime Minister George Papandreou will hold a conference call with German Chancellor Angela Merkel and French President Nicolas Sarkozy today amid increasing speculation that Greece will default. Spain is scheduled to sell debt tomorrow, after demand dropped during an auction by Italy yesterday.
China United, which controls the nation’s second-largest cell phone operator, rose 3.2 percent to 5.10 yuan, its highest close since Aug. 2.
Sinolink Securities set a share-price estimate of 6.96 yuan, saying China United is likely to have an “explosive” growth in the number of subscribers of its third-generation networks, Chen Yunhong, an analyst at the brokerage, wrote in a report yesterday.
China Coal rose 1.9 percent to 9.64 yuan after production of the fuel rose 17 percent last month.
Other coal producers advanced. China Shenhua Energy Co., the nation’s largest, added 0.6 percent to 25.64 yuan. Datong Coal Industry Co., the third biggest, gained 1 percent to 16.02 yuan.
Anhui Conch, China’s biggest cement maker, slid 2.8 percent to 17.77 yuan. Gansu Qilianshan Cement Group Co. lost 1 percent to 12.69 yuan. Huaxin Cement Co., the Chinese affiliate of Holcim Ltd., retreated 2.9 percent to 18.23 yuan.
Home transaction volumes in the cities of Beijing, Shanghai and Shenzhen continued to fall this month, Shanghai Securities News reported today, citing Centaline Property Agency Ltd. and Century21. Property sales in 19 out of the 35 Chinese cities surveyed fell last week, according to Soufun Holdings Ltd., the country’s biggest real-estate website owner.
--Zhang Shidong. Editors: Richard Frost, Matthew Oakley
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