China’s Stocks Gain for Fifth Week on Stimulus Plan Optimism
By Chua Kong Ho
Feb. 13 (Bloomberg) -- China’s stocks advanced, driving the benchmark index higher for a fifth week, on optimism government spending plans will revive growth and bolster corporate earnings. Trading surged to the highest in at least three years.
Sichuan Changhong Electric Co. and GD Midea Electrical Appliances Co. surged 10 percent after 21st Century Business Herald said the government plans to invest $88 billion in the electronics industry. China Railway Group Ltd. gained 7.7 percent after winning construction contracts. Aluminum Corp. of China Ltd. jumped 8.8 percent after its parent bought into Rio Tinto Group.
The rally is being “fueled by expectations of additional incentives for various sectors,” said Gabriel Gondard, Shanghai- based deputy chief investment officer at Fortune SGAM Fund Management Co., which oversees about $7 billion in assets. “It will not be sustainable in the long run if we don’t get actual data showing the stimulus plan is effective.”
The Shanghai Composite rose 3.2 percent to 2,320.79 at the close, the highest since Sept. 1. The measure gained 6.4 percent this week, capping the longest weekly winning streak since October 2007, the same month the measure closed at a record 6,092.06 points.
Stock trading volume on the Shanghai and Shenzhen exchanges rose to 32.96 billion, the highest since Bloomberg began compiling the data on Jan. 3, 2006, according to preliminary figures. An average 18.3 billion shares have changed hands daily this year, up from 15 billion in 2007, when the Shanghai Composite doubled.
Trading volumes plunged to an average 9.8 billion shares last year as the index tumbled 65 percent amid a global recession.
Stimulus Rally
Shares in the world’s third-largest stock market by capitalization have rallied since Nov. 9, when China pledged a 4 trillion yuan ($585 billion) stimulus package. The index has gained 27 percent this year, the most among 90 stock gauges worldwide tracked by Bloomberg, as the government unveiled plans to aid industries from shipbuilding to textiles.
Raw-materials producers and consumer-related stocks were the top gainers among industries on the CSI 300 Index, which tracks shares on the Shanghai and Shenzhen exchanges.
There are signs the stimulus package is taking effect. China’s economy may expand 6.6 percent in the second quarter after slowing to 6.3 percent in the three months to March 31, the weakest pace since 1999, according to the median estimate of 14 economists surveyed by Bloomberg News.
Sichuan Changhong, a Chinese television maker, gained the daily maximum 10 percent to 4.84 yuan, capping a six-day, 27 percent rally. GD Midea, China’s second-biggest appliance maker, added 10 percent to 12.13 yuan. Gree Electric Appliances Inc., which makes air conditioners, climbed 6.7 percent to 24.03 yuan.
Spending Plan
The government plans to invest more than 600 billion yuan in the telecommunications and electronics industries, the 21st Century Business Herald reported. China may also raise export tax rebates for 25 electronics products to 17 percent, it said.
“This will be a big boost to the whole IT industry in China,” DBS Vickers Ltd. analyst Steven Liu wrote in a note to clients today. “Market leaders would benefit most.”
China Railway, the nation’s largest construction company by total assets, gained 7.7 percent to 6.02 yuan, the most since Nov. 13. The Beijing-based builder said it secured contracts worth 23 billion yuan to build railways, stations and highways in the country. The orders are equal to 13 percent of 2007 operating income, it said.
Chalco, as the nation’s biggest aluminum producer is known, gained 8.8 percent to 11.41 yuan after its parent agreed to invest $19.5 billion in Rio Tinto, the world’s third-largest mining company.
The following stocks also rose or fell in China trading. Stock symbols are in parentheses after company names:
Fushun Special Steel Co. (600399 CH), the Chinese steel products manufacturer, gained 3.4 percent to 5.18 yuan. The company said 2008 profit climbed 46 percent from a year earlier to 34.7 million yuan.
Ningxia Hengli Steel Wire Rope Co. (600165 CH), a Chinese rope and wire producer, gained 10 percent to 5.67 yuan. Profit for 2008 gained 7.5 percent from a year earlier to 5.63 million yuan, the company said in a filing to the stock exchange.
Zhongtian Urban Development Group Co. (000540 CH), a Guizhou- based property developer, added 10 percent to 8.90 yuan. The company said 2008 profit rose 58 percent to 191 million yuan from the year earlier. |
