Business Standard

China's stocks rally most in 3 years on support speculation

Related News

China’s stocks jumped the most in three years on speculation state-backed institutions were buying shares as a manufacturing survey added to optimism the world’s second-largest economy will rebound.

The climbed 4.2 per cent to 2,149.21 at 2:48 pm. were more than double the 30-day average for this time of day. A gauge tracking financial companies surged 6.4 per cent as brokerages jumped on signs the government will allow more overseas funds to buy equities. Co led a rally by industrial companies higher after a preliminary reading for a factory output index rose.

“It looks like institutional investors are re-entering the market and they have to increase their stock positions now in order not to miss the boat,” said Dai Ming, a fund manager at Hengsheng Hongding Asset Management Co in Shanghai, which manages $190 million. “The economy has stabilised.”

The surged 4.7 per cent to 2,348.16, with all 10 industry groups advancing more than two per cent. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong rose 1.6 per cent to a nine-month high.

The Shanghai Composite has advanced four per cent this week, extending last week’s 4.1 per cent rally that was the biggest in 13 months. Shares have rebounded from an almost four-year low reached on December 3. The gauge is still down 2.5 per cent this year, heading for a third straight annual loss.

The 994-member index trades at 11.8 times reported earnings after valuations fell to 10.8 this month, the lowest level since at least 1997, data compiled by Bloomberg show.

Ping An
“There’s speculation that Ping An Insurance is increasing its positions in Chinese equities,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co, which oversees $285 million. Ping An Insurance (Group) Co, the second-largest insurer in China, rallied eight per cent to 41.95 yuan.

Speculation that large insititutions are buying shares follows data this week showing the number of trading stock - trading accounts containing funds declined to the lowest in two years.

A gauge tracking financial companies jumped 6.4 per cent on the CSI 300. Citic Securities, China’s biggest listed brokerage, rallied seven per cent to 11.50 yuan. Haitong Securities Co, the second largest, gained 6.1 per cent to 9.33 yuan.

China may relax or abolish a rule that requires Renminbi Qualified Foreign Institutional Investors (RQFII) to keep most of their funds in bonds, according to the Hong Kong Monetary Authority, a move that may boost demand for stocks.

Banks rally
RQFII funds, which raise yuan overseas, now must invest at least 80 per cent of their assets in China’s onshore bond market, with the rest going into equities or kept as cash.

Stocks also gained ahead of this weekend’s Central Economic Working Conference, which sets the tone for policies for 2013. The Chinese government may announce it will keep its economic growth target at 7.5 per cent, according to Nomura Holdings Inc.

ICBC paced gains for banks, jumping 3.3 per cent to 4.08 yuan. Agricultural Bank of China Ltd advanced 4.1 per cent to 2.79 yuan, the most since October 2010.

The December preliminary reading for the HSBC Holdings Plc and Markit Economics’s purchasing managers index rose to 50.9, more than the 50.8 median estimate in a Bloomberg News survey of economists and the final reading of 50.5 for November. Last month was the first time in 13 months it was above the expansion-contraction dividing line of 50.

Sany Heavy, the biggest Chinese machinery maker, advanced 6.7 per cent to 9.25 yuan. Anhui Conch Cement Co rose 3.6 per cent to 18.56 yuan, its highest level since November 2011.

Leadership transition
Today’s report may bolster confidence in the economic recovery after November’s trade and new loans trailed estimates.

Recent stock market gains had failed to stem equity outflows. Accounts containing funds used to trade stocks dropped by about 49,000 in the week to December 7 to 55.55 million, the lowest level since the week to November 26, 2010, according to regulatory data compiled by Bloomberg on December 12. Investors emptied 205,000 accounts the previous week, the most in 16 months.

The Shanghai Composite’s 9.7 per cent rally from its December 3 low still lags the 26 per cent gain by the Hang Seng China index of mainland companies listed in Hong Kong from its September 5 low. Chinese companies on the mainland traded at their biggest discount to their Hong Kong-traded counterparts since January 2011 yesterday, according to an index from Hang Seng Bank Ltd.

Read more on:   
|
|
|
|

Read More

Two entities fail to make prima facie case to revoke ban: Sebi

The Securities and Exchange Board of India (Sebi) today said the restraining order on two entities, related to plunge in some mid-cap stocks in July, ...

Advertisements

Quick Links

 

Market News

Gail (India) hits new high as Q2 profit beats estimates

The stock surged 8% to Rs 552 after reporting 42% yoy jump in net profit at Rs 1,303 crore in September 2014 quarter.

Markets extend gains; Metal and IT shares rally

The 30-share Sensex is up 408 points at 27,754 and the 50-share Nifty has gained 117 points at 8,285

Gold hits 4-year low on selling pressure following Fed's QE withdrawal

Miners and sovereign countries started hedging, fall to continue in anticipation of US interest rate hike earlier than expected

Nikkei hits 7-year high as BoJ expands monetary easing

The Nikkei surged 755.56 points or 4.83% to end at 16,413.76, its highest level since November 2007

Maruti Suzuki India, Axis Bank joins Rs 1-lakh-cr market-cap club

Axis Bank hits a record high of Rs 440, while Maruti Suzuki touched a new high of Rs 3,349 in intra-day deals on BSE.

Back to Top