China’s stocks rose, sending the benchmark index to a seven-week high, on speculation the government will take steps to avoid a deeper economic slowdown.
China Eastern Airlines Corp. and China Southern Airlines Co. gained at least 0.8 percent after the China Business News said jet fuel prices fell. Bank of China Ltd. and China Construction Bank Corp. retreated after Temasek Holdings Pte., Singapore’s state-owned investment company, sold $2.48 billion of Hong Kong-traded shares in the two banks.
The Shanghai Composite Index (SHCOMP) rose 1.64 points, or less than 0.1 percent, to 2,440.08 after changing direction more than 30 times, closing at the highest level since March 13. The CSI 300 Index (SHSZ300) advanced 0.3 percent to 2,691.52.
“Investors are in a dilemma,” said Wu Kan, a Shanghai- based fund manager at Dazhong Insurance Co., which oversees $285 million. “On one hand, there’s constant speculation about policy easing so there’s hope looking forward. But fundamentals for the overall economy remain weak.”
The Oriental Morning Post said China’s central bank may cut the reserve ratio for banks as early as this week. China has reduced reserve requirements for banks twice since November, though it has kept benchmark rates on hold since July at the highest level since 2008.
China’s non-manufacturing industries grew at a slower pace in April, a survey indicated. A purchasing managers’ index was at 56.1, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in a statement today in Beijing. That compares with 58 for March. A reading above 50 indicates an expansion.
American companies added 119,000 workers in April, the fewest in seven months, according to data from a private survey. The report intensified concern that Labor Department data tomorrow may show the U.S. isn’t growing fast enough to reduce unemployment.
The jobless rate in the euro area rose to 10.9 percent in March, manufacturing contracted last month and unemployment in Germany unexpectedly increased, reports showed.
About 12.86 billion shares changed hands in the Shanghai Composite yesterday, or 62 percent higher than the daily average this year. Thirty-day volatility in the gauge was at 17.31. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. added 0.2 percent to 104.86 in New York.
Bank Stake Sales
The Shanghai index has climbed 10.9 percent this year amid speculation the government will take measures to boost the economy. Stocks in the gauge are valued at 10.5 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg.
China Construction slid 0.8 percent to 4.73 yuan. Bank of China lost 0.3 percent to 3.06 yuan. Temasek is selling about $1.2 billion of Bank of China shares at HK$3.13 to HK$3.18 apiece, a discount of as much as 4 percent to its closing price Wednesday in Hong Kong, according to term sheets obtained by Bloomberg News. The firm is also selling about 1.6 billion shares in China Construction Bank at HK$5.99 to HK$6.10 apiece, the documents show.
China Eastern Airlines rose 1.7 percent to 4.24 yuan. China Southern Airlines advanced 0.8 percent to 5.02 yuan. May domestic jet fuel prices fell to 7,932 yuan a ton, from 8,061 yuan in April, China Business News said, citing airlines.
Western Securities Co. (002673), a brokerage, gained 67 percent in its debut on Shenzhen’s stock exchange.
Chinese shares traded in Shanghai will rally and enter a bull market as the benchmark index trades above its 200-day moving average, according to technical analysis by Federated Investors Inc.
The Shanghai A-Share Stock Price Index -- which tracks so- called A shares restricted to local investors and qualified foreigners on the Shanghai Stock Exchange -- may climb as much as 15 percent by the end of the year after the gauge rose above its 200-day average of 2,552.78 yesterday, said Audrey Kaplan, a senior portfolio manager at Federated in New York.
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