China’s stocks rose, driving the benchmark index to its second weekly gain, after bank lending surged and as slower-than-forecast economic growth gave the government more scope to loosen monetary policy.
Shenzhen Special Economic Zone Real Estate (Group) Co. (000029) led gains by companies in the southern city after the Securities Times newspaper reported the local government passed measures to improve financial services. Xiamen Tungsten Co. led material stocks higher.
The Shanghai Composite Index (SHCOMP) climbed 4.28 points, or 0.2 percent, to 2,355.14 at the 11:30 a.m. local-time break, poised for its highest close since March 22. The statistics bureau said today the economy grew 8.1 percent in the first quarter, less than the 8.4 percent growth predicted in a Bloomberg survey. New lending was 1.01 trillion yuan ($160 billion) in March, the most since January 2011, central bank data yesterday showed.
“The China growth figure was below consensus estimates,” Chu Moon Sung, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees $28 billion and holds a license to invest in yuan-denominated securities. “I don’t think it’s bad enough to talk about a so-called hard landing. I believe the slower growth figures will also boost expectations for more measures from the Chinese government.”
The CSI 300 Index (SHSZ300) rose 0.3 percent to 2,578.76. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, added 2.5 percent in New York yesterday.
Thirty-day volatility in the Shanghai Composite was at 18.5 today, near the highest level in a month. About 9.8 billion shares changed hands in the gauge yesterday, 13 percent higher than the daily average this year.
The Shanghai index has gained 2.1 percent this week, poised for a second weekly gain, on speculation the government will take measures to boost the economy. Stocks in the gauge are valued at 9.9 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg. The measure is up 7.1 percent this year.
The 8.1 percent economic growth was the slowest in almost three years. The median estimate in a Bloomberg News survey of 41 economists was for an 8.4 percent gain. The government cut this year’s growth target last month to 7.5 percent, after keeping it at 8 percent over the previous seven years.
“It encourages relaxation of interest rates,” said Hugh Simon, chief executive officer of Hamon Investment Group, said on Bloomberg Television today from Hong Kong. “The market takes it reasonably well at the moment because they see it as a reason for the government to ease reserve-requirement ratios, easing lending and hopefully cut interest rates.”
The People’s Bank of China has lowered the amount major banks must set aside as reserves twice since November to spur lending as a global slowdown looms. Policy makers also doubled the amount foreigners are allowed to invest in China’s capital markets on April 4 to lure more investment.
Industrial production rose at a faster pace in March while retail sales growth accelerated, the National Bureau of Statistics said today.
Shenzhen Special Economic Zone Real Estate jumped 5.1 percent to 4.50 yuan, set for its highest close since Nov. 15. Shenzhen Shenxin Taifeng Group Co. surged by the 10 percent daily limit to 5.71 yuan. Shenzhen Tagen Group Co. (000090) advanced the maximum 10 percent to 9.46 yuan.
Shenzhen will deepen financial cooperation with Hong Kong through the development of the Qianhai area in the city, the Securities Times reported today, citing a proposal.
The city will also accelerate the trial of cross-border yuan lending with Hong Kong and plans to allow more companies to sell yuan bonds in Hong Kong, according to the report.
The MSCI Asia Pacific Index (MXAP) rose 0.8 percent today after North Korea said its rocket launch failed and the Federal Reserve officials signaled interest rates will remain low through 2014.
The Bloomberg China-US 55 Index posted its biggest daily jump in three months yesterday, buoyed by social media stocks, on signs looser monetary policy is already bolstering lending in the world’s second-largest economy.
--Zhang Shidong. With assistance from Saeromi Shin in Seoul and Weiyi Lim in Singapore. Editor: Chan Tien Hin, Darren Boey
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