Bloomberg News

China’s Stocks Post Weekly Gain as Ping An, Liquor Makers Rally

November 23, 2012

China stocks rose, sending the benchmark index to its first weekly gain in three weeks, as consumer-staple and finance companies climbed.

Ping An Insurance (Group) Co. (601318) advanced for a third day, leading gains by financial shares. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. increased 1.4 percent after the Financial Times said China will extend rare-earth subsidies. Wuliangye Yibin Co. rallied following a six-day slump amid concerns over the quality of Chinese liquor products. JiuGuiJiu Co. (000799) plunged 10 percent after a four-day trading halt as it apologized for excessive levels of plasticizer in its drinks.

The Shanghai Composite Index closed 0.6 percent higher at 2,027.38, taking its weekly gain to 0.6 percent. Stocks advanced as the official Xinhua News Agency reported a pledge by Vice Premier Li Keqiang to deepen reforms to promote scientific development and transform the pattern of the nation’s economic development. The CSI 300 Index (SHSZ300) climbed 0.7 percent to 2,192.68. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong added 0.9 percent.

“Investors are comforted by the signs of reforms but as you can see, the gains are not very strong,” Zhou Lin, an analyst at Huatai Securities Co., said by phone from Nanjing. “Such rebounds are never sustainable because volumes remain low and confidence is weak. We need to see more concrete measures. This is not a time to enter the market yet.”

The Shanghai Composite dropped below the 2,000 level during intraday trading twice this week and rallied to close above that level amid speculation of government support. The index dropped 0.7 yesterday even as a purchasing managers’ index signaled the nation’s manufacturing industry may have expanded in November for the first time in 13 months.

Key Level

Shanghai Composite trading volumes were 17 percent lower than the 30-day average for this time of day, according to data compiled by Bloomberg. Thirty-day volatility on the index was at 13.2, compared with this year’s average of 17.4.

The gauge has fallen 1.4 percent since new leaders were named by the ruling Communist Party Nov. 15 amid concern they will fail to accelerate the pace of measures to liberalize the world’s second-largest economy. The gauge has slumped 7.8 percent this year and trades at 9.6 times estimated profit for 2012, compared with the 17.8 average multiple since Bloomberg began compiling the data in 2006.

The nation needs to break all “systematic” obstacles that hinder scientific development, Xinhua cited Vice Premier Li as saying. The provincial government of eastern Zhejiang introduced 12 detailed policies for financial reform in Wenzhou city, Xinhua reported separately, citing the city’s government.

HSBC Stake

It’s possible the nation may widen the yuan’s trading band in the first quarter, Xinhua said in another article about the currency’s appreciation in the past month. The news agency didn’t cite anyone, nor did it indicate any government intention to widen the trading band. The yuan has appreciated 0.3 percent against the dollar since Oct. 23.

Ping An, China’s second-largest insurer, gained 1.7 percent to 37.12 yuan, taking its three-day advance to 5.1 percent. The stock had slumped 4.8 percent on Nov. 19-20 after HSBC Holdings Plc it’s in talks to sell its 15.6 percent holding in Ping An.

The $9.6 billion stake offers investors a share in a diversified business with stable profit growth, according to analysts at Capital Securities Co. and BoCom International.

Inner Mongolia Baotou (600111) climbed 1.4 percent to 33.67 yuan. China will extend subsidies of $35 million to $40 million annually, the Financial Times reported. Baoshan Iron & Steel Co. added 0.4 percent to 4.63 yuan after saying it had bought back 352.2 million shares as of Nov. 22.

Liquor Makers

A gauge of consumer staple companies in the CSI 300 Index gained 1.5 percent, the most of 10 industry groups. Liquor makers led the consumer gauge’s 4.8 percent slump this week through yesterday as the nation’s quality watchdog found excessive levels of plasticizer in drinks made by JiuGuiJiu.

Wuliangye Yibin, the nation’s second-largest publicly traded liquor maker, gained 0.9 percent to 27.71 yuan, while Sichuan Swellfun Co. (600779) climbed 1.8 percent to 19.40 yuan. Both stocks lost at least 10 percent this week. Kweichow Moutai Co. advanced 2.2 percent to 222.11 yuan.

“Other liquor makers fell when Jiuguijiu was halted,” said Huatai’s Zhou. “The bad news is priced in. This doesn’t mean it’s time to buy the shares. Don’t touch the shares for now.”

JiuGuiJiu declined 10 percent to 42.82 yuan as it resumed trading. The spirit maker apologized yesterday to consumers and investors in a stock exchange filing and said it is co-operating with requests from the provincial quality watchdog to run strict checks on its distribution and packaging processes.

The Bloomberg China-US 55 Index (CH55BN), the measure of the most- traded U.S.-listed Chinese companies, did not trade as U.S. markets were closed for a holiday.

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

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


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus