China’s stocks rose, sending the benchmark index up by most in a week, on speculation the economy is stabilizing before the release of a government report tomorrow on third-quarter growth.
Anhui Conch Cement Co. (600585) led a gauge of industrial stocks higher after Credit Suisse Group AG said the worst is probably over based on data such as housing starts and manufacturing indexes. Fortress Investment Group LLC turned bullish on China’s yuan and equities on the prospect of pro-growth measures after the Communist Party congress in November. GF Securities Co. advanced 1 percent after the China Securities Journal reported regulators may allow brokerages to expand their business scope.
China’s “growth is continuing and doing very well,” Mark Mobius, executive chairman of the Templeton Emerging Markets Group, said in a Bloomberg Television interview today from Hong Kong. Mobius said he’s buying consumer stocks and considers smaller companies to be cheap.
The Shanghai Composite Index (SHCOMP) added 0.3 percent to 2,105.62 at the close, erasing a 0.5 percent loss. The CSI 300 Index (SHSZ300) rose 0.1 percent to 2,300.80. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong climbed 1.1 percent. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, gained 0.7 percent in New York yesterday.
The Shanghai Composite has rebounded 5.1 percent since reaching a three-year low on Sept. 26 on expectations regulators will introduce measures to stabilize the market ahead of a once- in-a-decade power transition of the Communist Party in November. The gauge is valued at 9.8 times estimated earnings, compared with the 17.9 average since Bloomberg began compiling the weekly data in 2006.
The National Bureau of Statistics is scheduled to release third-quarter gross domestic product data tomorrow. The economy probably expanded 7.4 percent, the slowest pace in more than three years, according to the median estimate of 43 analysts surveyed by Bloomberg. Industrial production, fixed-asset investment and retail sales data are also due the same day.
Anhui Conch, China’s biggest cement maker, rose 1.5 percent to 16.14 yuan. Gansu Qilianshan Cement Group Co. (600720) gained 1.8 percent to 10.73 yuan. SAIC Motor Corp., China’s largest carmaker, added 1.3 percent to 13.01 yuan.
China’s worst is probably over as infrastructure investment, housing starts, retail sales, manufacturing indexes and construction machinery sales all indicate the economy is stabilizing, Vincent Chan and Peggy Chan, analysts at Credit Suisse, wrote in a report dated yesterday.
Fortress turned bullish on the yuan and Chinese equities, after betting on declines earlier in the year, as it predicts the government will arrest a seven-quarter slowdown in the world’s second-largest economy.
China showed signs of “stabilization and modest improvement” last month and pro-growth measures are likely once the nation’s new leadership is appointed in November, Adam Levinson, chief executive officer of the hedge fund’s Singapore unit and manager of its Asia Macro Fund, said in an interview yesterday. Fortress (FIG:US) manages $47.8 billion of assets globally.
Industrial & Commercial Bank of China (601398) Ltd., the nation’s biggest listed lender, rose 0.8 percent to 3.85 yuan. Shanghai Pudong Development Bank Co. (600000) gained 1.2 percent to 7.55 yuan. Ping An Bank Co. added 1.1 percent to 13.36 yuan.
Credit Suisse raised its recommendation on Chinese banks to overweight from market weight, citing signs the Chinese economy is bottoming.
GF Securities, the third-largest listed brokerage by market value, added 1 percent to 13.63 yuan. Industrial Securities Co. advanced 2.7 percent to 10.65 yuan.
Innovation policies will include relaxing limits on brokerages’ operations and investment methods, accelerating new product launches and supporting cross border operations and brokerages’ listing, the China Securities Journal reported.
China’s publicly traded non-financial companies’ profits for the first nine months probably dropped 17 percent from the year-earlier period, almost unchanged from the first half, Li Peng, Huang Xindong and Chen Jianxiang, analysts at Shenyin & Wanguo Securities Co., wrote in a report today.
The Chinese currency touched 6.2525 per dollar in Shanghai today, the strongest level since the government unified the official and market exchange rates at the end of 1993. It has advanced 2.3 percent from a 2012 low of 6.3967 on July 25.
Mitt Romney, neck-to-neck in polls with President Barack Obama, reiterated today during their second debate he will declare China a currency manipulator on his first day in the White House, a precursor to import duties not taken since 1994.
Thirty-day volatility in the Shanghai Composite was at 19.6 today, compared with this year’s average of 17.2. About 5.9 billion shares changed hands in the gauge, 23 percent lower than the daily average in 2012.
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