China stocks cap third weekly advance

Shanghai - China’s stocks completed a third weekly rise, boosted by brokerages amid increased earnings and optimism that property market curbs will divert more money into equities.

The Shanghai Composite Index posted a weekly gain of 0.4%. Guotai Junan Securities Company added 0.5% after reporting on Thursday that third-quarter net income rose from last year.

Soochow Securities Company advanced 1.2% after earlier reporting that net income jumped 79% from a year ago. The Hang Seng Index lost 1% at 3:33.

"Brokerages’ earnings have probably already bottomed out after last year’s stock crash," said Dai Ming, a money manager at Hengsheng Asset Management Company in Shanghai. Trading volumes have been muted, so there’s not much room for them to fall further, he said.

The Shanghai gauge reached a nine-month high on Tuesday on optimism that China’s economy is stabilising and that equities will benefit from fund inflows resulting from a crackdown on the property market.

Investors are also anticipating the start of a trading link between Shenzhen and Hong Kong this year, and economists expect an official Purchasing Managers’ Index for manufacturing due next week to remain positive.

The Shanghai Composite dropped 0.3% to 3 104.27 at the close. The CSI 300 Index slid 0.2%, while the Hang Seng China Enterprises Index lost 1.1%. In Taiwan, the Taiex gauge closed 0.1% higher.

Trading volumes in Shanghai were 16% above the 30-day average. Still, turnover on the benchmark gauge is down more than 84% from the peak in June last year before the stock bubble popped, causing a $5trn rout.

A gauge of financial shares advanced 0.5%, the biggest gainer among the 10 industry groups on the CSI 300 Index. Huatai Securities Company jumped 2.5% and Sinolink Securities Company added 1%.

China Construction Bank Corporation climbed 0.6% in Shanghai. The lender reported a 1.3% gain in third-quarter earnings by letting its bad-loan buffer fall below a regulatory minimum.

Industrial & Commercial Bank of China, the nation’s biggest lender by assets, added 0.5%. ICBC is to release its earnings after the market closes.

Coal gains

For the week, coal producer’s paced gains among Shanghai equities on optimism supplies will remain strained as the government steps up efforts to cut excess capacity in the industry.

Shaanxi Coal Industry Company and China Coal Energy Company both surged 12% for the week.

China’s Communist Party wrapped up a major four-day meeting on Thursday, and afterward the state-run Xinhua News Agency cited an official communique as saying the ruling party declared Xi Jinping its "core."

Zhang Lifan, a Beijing-based historian, said the new title "technically gives him the absolute power inside the party."

Iris Pang, senior economist for Greater China at Natixis Asia in Hong Kong, said the market reforms Xi has called for are still on the table.

"The ideas of Xi being the even more centralised power of the central government and market reform can co-exist," she said.

An official manufacturing Purchasing Managers’ Index for October will remain above 50 when it is released on November 1, according to the median estimate of a Bloomberg survey.

That would be the third straight month of expansion.