Bloomberg News

China’s Stocks Rise, Set for Fifth Weekly Gain; China Life Jumps

February 17, 2012

Feb. 17 (Bloomberg) -- China’s stocks rose, driving the benchmark index toward the longest weekly gains in 15 months, as fewer U.S. jobless claims and speculation Greece will secure a second European debt bailout bolstered the outlook for China’s two biggest export markets.

China Life Insurance Co. gained 2 percent, leading a gauge of financial stocks to the biggest advance among industry groups after the insurer’s premium income rose 12 percent in January. China Cosco Holdings Co., the world’s largest operator of dry- bulk ships, advanced 2 percent. China Vanke Co., the largest property developer, slid 0.8 percent after the Economic Information Daily quoted a housing official as saying the government will keep property curbs in place for the long term.

“The global economy isn’t as bad as some people had feared, which is good for China and Chinese companies,” Jeff Papp, a senior analyst in Lisle, Illinois, at Oberweis Asset Management Inc., which manages $700 million including Chinese stocks, said by phone yesterday. “Most people still expect China’s central bank will do more easing as the government has shifted to a more accommodative mode in supporting growth.”

The Shanghai Composite Index rose 6.6 points, or 0.3 percent, to 2,363.49 as of 1:36 p.m. local time. The CSI 300 Index added 0.3 percent to 2,543.83. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, added 1.5 percent yesterday in New York.

The Shanghai Composite has advanced 0.6 percent this week, a fifth week of gains and the longest winning streak since Nov. 5, 2010. It has rebounded 9.7 percent from a Jan. 5 low on speculation the central bank will cut reserve-requirement ratios for lenders to spur growth. It announced a reduction in reserve ratios on Nov. 30, the first since 2008, after boosting them and interest rates last year to cool inflation.

Global Economy

China may cut banks’ reserve requirements three more times in the first half, after the central bank said this week it is targeting greater growth in money supply in 2012, HSBC Holdings Plc economists said in a report e-mailed yesterday.

A gauge of banks, insurers and brokers in the CSI 300 added 0.6 percent, the most among 10 industry groups. China Life rose 2 percent to 18.63 yuan after it said last month’s premium income increased to 49.1 billion yuan ($7.8 billion) from 43.9 billion yuan a year ago. Rival Ping An Insurance Group Co. advanced 0.7 percent to 39.95 yuan.

Asian stocks rose today after reports showed Americans filed the fewest claims for jobless benefits since March 2008 and builders broke ground on more houses than expected. Manufacturing in the Philadelphia region expanded this month at the fastest pace in four months as orders and sales rose.

Europe Debt

European governments are considering cutting interest rates on emergency loans to Greece and using contributions from the European Central Bank to plug a new financing gap in the second Greek bailout, two people familiar with the talks said.

Europe and the U.S. account for about 35 percent of China’s overseas shipments, according to Shenyin & Wanguo Securities Co. China Cosco advanced 2 percent to 5.62 yuan.

Commerce Minister Chen Deming said he is looking to support exporters by easing funding pressures on companies and keeping the local currency’s exchange rate stable, according to a Feb. 12 statement published on his ministry’s website.

China may set its lowest annual growth target in eight years as authorities place less emphasis on the pace of expansion and the global economy remains weak, Fan Jianping, chief economist at the government-run State Information Center, said.

Lower Targets

Premier Wen Jiabao may announce a 7 percent or 7.5 percent target for economic growth this year at the annual National People’s Congress meetings that convene in March, Fan said in an interview yesterday. The last time China set a growth target below 8 percent was in 2004, when the goal was 7 percent.

An index tracking housing developers in the Shanghai stock exchange fell 0.4 percent today. China Vanke slid 0.8 percent to 7.73 yuan. Gemdale Corp. declined 1.7 percent to 5.25 yuan.

The property gauge slumped 18 percent last year as the government limited mortgages and restricted home purchases to rein in home prices that increased in the previous two years. The cooling market helped slow gross domestic product growth in 2011 to 9.2 percent, matching the smallest expansion since 2002.

China’s housing market is experiencing the “mother” of all bubbles, and a property slump will hurt everything from Australian mining firms to Europe’s luxury-goods makers, according to Grantham, Mayo, Van Otterloo & Co.

“We are very concerned” about China’s economy, Peter Chiappinelli, a portfolio strategist for asset allocation at Boston-based GMO, said at the Bloomberg Link Portfolio Manager Mash-Up Conference in New York. “All bubbles pop eventually.”

GMO, which oversees $97 billion in assets, is betting that shares of Chinese real-estate developers, construction companies and cement producers will decline, said Chiappinelli.

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., rose to a one-week high as China Mobile Ltd. and Cnooc Ltd. jumped on speculation of more monetary easing.

--Zhang Shidong. Editors: Allen Wan, Richard Frost

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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