China’s stocks rose, sending the benchmark index to its longest weekly winning streak in almost eight years, amid speculation the government will take more steps to boost economic growth.
Yonyou Software Co. surged 10 percent as technology shares extended the biggest rally among industry groups after the State Council said this week it will set up a fund to support emerging industries. Dongfang Electric Corp. (600875) led gains for industrial companies as Premier Li Keqiang said China should promote exports of nuclear power equipment. Zijin Mining Group Co. (601899) climbed 3.9 percent as gold prices rose on demand for safe havens after Switzerland decided to decouple its currency from the euro. The yuan posted its biggest drop in five weeks.
The Shanghai Composite Index (SHCOMP) rose 1.2 percent to 3,376.50 at the close. The gauge advanced 2.8 percent this week, a 10th week of gains that’s the longest winning streak since May 2007, after credit growth expanded and speculation grew the central bank will
cut reserve-requirement ratios. China is scheduled to release data on Jan. 20 that’s forecast to show the economy grew in the fourth quarter at the slowest quarterly pace since 2009.
“Sentiment is still pretty good as the overall liquidity environment is adequate,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co. “The Swiss currency saga has very little impact on China’s stock market.”
The CSI 300 Index added 0.9 percent. Hong Kong’s Hang Seng China Enterprises Index (HSCEI) dropped 0.9 percent, while the Hang Seng Index slid 1 percent. The ChiNext index, dominated by technology and consumer companies, rallied 3.4 percent. The Bloomberg China-US Equity Index added 0.1 percent yesterday.
Gold Stocks
The Shanghai Composite is the best performer among 93 global indexes tracked by Bloomberg over the past year with a 67 percent gain. The index was valued at 12.6 times 12-month projected earnings this week, the highest level since April 2011, according to data compiled by Bloomberg. Trading volumes were 26 percent below the 30-day average today.Besides the growth data, China’s statistics bureau will also release figures on retail sales, industrial production and fixed-asset investment for December on Jan. 20. The nation’s gross domestic product growth probably slowed to 7.2 percent in the October-to-December period, the slowest pace since 2009, according to the median estimate of a Bloomberg survey.
China’s monetary policy has room for more easing, the China Securities Journal reported on its front page today. The People’s Bank of China granted 50 billion yuan ($8.1 billion) of relending quotas as credit support for micro businesses and the agricultural industry, according to a statement posted on its website today.
Financials Advance
Bank of Communications Ltd., part-owned by HSBC Holdings Plc, paced gains for lenders, rising 5.3 percent after Shenyin & Wanguo Securities Co. raised its recommendation to buy from neutral. The lender is expected to lead mixed-ownership reform of state-owned enterprises in the industry, Xu Bingyu, an analyst at the brokerage, wrote in a report today.Bocom rallied 11 percent this week, while China Life Insurance Co. surged 8.7 percent. A gauge of financial companies in the CSI 300 gained 3.1 percent this week. Data this week showed aggregate financing exceeded estimates in December, while a rule that changes the way banks calculate loan-to-deposit ratios took effect yesterday.
A sub-index of technology stocks gained 3.7 percent, completing an 8.5 percent rally this week for the best performance among the CSI 300’s 10 industry groups. DHC Software Co. jumped 7.9 percent, while Shanghai Wangsu Science & Technology Co. (300017) gained 7.5 percent. The nation plans to set up a 40 billion yuan fund to support emerging industries, the State Council said Jan. 14.
Nuclear Power
Zijin Mining, China’s largest gold producer, gained for a second day, while Shandong Gold jumped 7.1 percent. Zhongjin Gold Co. added 5.3 percent.The Swiss move will increase demand for safe-haven assets such as gold, Aviate Global Asia Ltd.’s Robert Buckley said in a note. Bullion for immediate delivery traded near a four-month high today after jumping 2.8 percent yesterday for the biggest increase this year, according to Bloomberg generic pricing.
The yuan weakened 0.31 percent, the most since Dec. 8, to 6.2071 a dollar as of 3:07 p.m. in Shanghai as the Swiss shock boosted demand for the greenback.
Shanghai Electric Group Co. gained 3.2 percent while Dongfang Electric gained 1.6 percent. China First Heavy Industries Co. (601106) rose 2.4 percent. President Xi Jinping said the nation should improve the competitiveness of its nuclear power industry, the official Xinhua News Agency reported.
China Overseas Land & Investment Ltd. (688) led declines for developers in Hong Kong after authorities in Shenzhen blocked unit sales by the company and other developers. China Overseas Land fell 2.8 percent. More than 2,800 apartments developed by the company in Shenzhen were blocked from sale, according to the website of the local land authority, without giving a reason. The company said the affected units have been sold and the move won’t affect its business or finances.
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