China’s stocks rose for a second day on speculation the government will accelerate infrastructure spending to counter an economic slowdown and after German and French officials said they will work to keep Greece in the euro.
Anhui Conch Cement Co., the biggest Chinese cement producer, gained the most in a month after the China Securities Journal reported the government plans to speed up approval of infrastructure construction projects. China Vanke Co. and Poly Real Estate Group Co. advanced at least 3.9 percent as Macquarie Securities Ltd. said China may loosen property restrictions by the end of the year and the 21st Century Business Herald said China is unlikely to expand property tax trials nationwide.
“Investors are comforted by developments in Europe and expectations of more spending and policy easing,” said Chen Liqiu, a strategist at Jianghai Securities Co. in Shanghai.
The Shanghai Composite Index (SHCOMP), which tracks the bigger of China’s stock exchanges, rose 1.1 percent to 2,373.31 at the close, adding to a 0.2 percent gain yesterday after Premier Wen Jiabao said the government will focus more on bolstering economic growth. The CSI 300 Index (SHSZ300) advanced 1.6 percent to 2,627.53. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. jumped 2.8 percent at the close in New York.
The Shanghai index has climbed 7.9 percent this year on expectations the government will relax monetary policy to support growth and take more measures to bolster equities. The measure fell a combined 33 percent in 2010 and 2011 as the government increased interest rates to tame inflation.
Premier Wen said more efforts should be made to maintain relatively fast economic expansion. While current economic operations are generally stable and growth is still within the expected range, the domestic and external environments are becoming more complex, Wen said, according to a report from the the official Xinhua News Agency on May 20.
A leading index for China rose at the same pace in April as the prior month, offering investors some comfort that the world’s second-biggest economy may avoid a deeper slowdown.
The gauge increased 0.8 percent from March to 232.4, the New York-based Conference Board said in an e-mailed statement today, citing a preliminary reading. That compares with a 0.8 percent gain in March and 1 percent in February.
Stocks in the Shanghai gauge are valued at 10.2 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg. About 7.5 billion shares changed hands yesterday, 5.5 percent lower than the daily average this year. Thirty-day volatility in the gauge was at 15.09 today.
Anhui Conch climbed 3.4 percent to 16.67 yuan, the biggest gain since April 5. Sany Heavy Industry Co., the biggest maker of excavators, jumped 5.3 percent to 14.43 yuan.
This year’s infrastructure investment plans must be submitted before the end of June, the China Securities Journal reported, citing an unidentified person. The government may allocate construction funds earlier than planned, it said.
China Vanke, the nation’s biggest developer, gained 3.9 percent to 9.01 yuan while Poly Real Estate, the second largest, climbed 5.4 percent to 13.41 yuan. The gauge of property stocks in the Shanghai Composite advanced 2.9 percent, the most among five industry groups.
China is unlikely to expand a property tax trial to more cities in the near term and the government will continue home purchase restrictions, the 21st Century Business Herald reported today, citing Chen Guoqiang, vice chairman of the China Real Estate Society. Shanghai and Chongqing are the only two cities to have started property tax trials.
China will loosen property policies by the end of the year, Jiong Shao, head of China strategy at Macquarie in Hong Kong, said in an interview on Bloomberg Television. Macquarie is “increasingly positive” on the Chinese property industry, he said.
China Shenhua Energy Co., the biggest coal producer, gained 1 percent to 26.26 yuan. China International Capital Corp. said the coal industry may rally as early as the third quarter as the economy stabilizes.
Developments in France and Greece are having a direct impact on emerging-market stocks, including China, as Europe is the biggest buyer of exports from these economies, Michael Gayed, chief investment strategist in New York at Pension Partners LLC, which advises on over $150 million in assets, said yesterday by phone.
Germany and France agree that they will do “everything necessary” to ensure Greece remains in Europe’s currency union, Finance Minister Wolfgang Schaeuble said yesterday in Berlin after a meeting with France’s Pierre Moscovici.
Rebound Won’t Last
Europe is China’s biggest export market, making up about 18 percent of the nation’s overseas shipments, according to Shenyin & Wanguo Securities Co.
“This rebound is likely to be short-lived,” said Chen at Jianghai Securities. “The fundamental issues in Europe remain, easing in China is not going to accelerate and Chinese company earnings will still be bad this quarter so this is not a good time to enter the market.”
Morgan Stanley yesterday lowered its forecast for China’s growth this year to 8.5 percent from 9 percent, while the government aims for a 7.5 percent expansion this year. Economists led by Helen Qiao said in a report to clients they expect two interest-rate cuts this year, “zero” appreciation by the yuan against the dollar and expanded capital spending by the government and state-owned companies.
Chinese stocks trading in New York rose the most in four months, led by Tudou Holdings Ltd. Tudou’s American depositary receipts jumped 12 percent to $33.44, the biggest advance since March 12. Its acquisition by larger rival Youku is expected to close in the third quarter, Shanghai-based Tudou said in a statement yesterday.
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced for the first time since May 1, gaining 2.6 percent to $33.86, the biggest rally in five weeks.
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