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Shanghai - China’s stocks rose, paring the benchmark index’s quarterly loss, amid speculation the world’s second- largest economy is stabilising.
The Shanghai Composite Index added 0.4%, trimming this year’s loss to 15%. Industrial and consumer stocks led the advance. Chongqing Changan Automobile jumped the most since September on a plan to sell shares in a private placement. Hong Kong’s Hang Seng China Enterprises Index pared gains after briefly entering a bull market.
China’s economy is showing signs of stabilising, Premier Li Keqiang said last week at the Boao Forum. A report last weekend showed industrial profits halted declines to surge 4.8% in the first two months of the year, while manufacturing data on Friday will probably show improvement.
The Purchasing Managers’ Index rebounded to 49.4% in February from 49 a month earlier, according to the median estimates of a survey by Bloomberg. The yuan swung to a gain for the year against the dollar on Wednesday.
“The market still has very good sentiment after the recent rebound as economic data and the external market environment have calmed,” said Wei Wei, an analyst at Huaxi Securities in Shanghai. “Mainland stocks will probably catch up with gains in H shares.”
Worst performer
The Shanghai Composite rose for a second day to 3 012, 80 at 07:09. The so-called H-share index was little changed. It climbed as much as 0.8%, extending gains since a February 12 low to 20% - a level which some analysts see as a bull market. The CSI 300 Index advanced 0.4%, while the Hang Seng Index slipped 0.3%.
Gauges of industrial and consumer stocks in the CSI 300 climbed at least 1.2% for the biggest gains in the 10 industry groups. Chongqing Changan Automobile surged 9.9% after the company announced a private share sale. Citic Heavy Industries rallied by the 10% daily limit.
The Shanghai gauge is closing out the first quarter as the world’s worst-performing global measure, down 15%, with a rebound in March failing to compensate for a terrible start to the year. This month’s 12% recovery may extend into April, according to recent indicators such as growth in margin lending, a jump in the number of new investors and easing volatility.
Chinese stocks have recovered this month after the yuan stabilized, central banks around the world took steps to boost stimulus and commodity prices rebounded. The H-shares gauge traded as low as 5.6 times reported earnings last month, the cheapest since at least 2001, according to data compiled by Bloomberg.
“It’s a bounce back from an oversold situation," said Rahul Chadha, co-chief investment officer at Mirae Asset Global Investments, which oversees about $75bn. “Valuations were so cheap and positioning was so bearish that no bad news was good news."
In Hong Kong, Dalian Wanda Commercial Properties soared a record 18% after billionaire Wang Jianlin’s Dalian Wanda Group said it’s considering acquiring all outstanding Hong Kong-listed shares of its property unit for at least HK$31.3bn.
MSCI said China’s inclusion in global benchmark stock indices will rest on whether authorities are prepared to prevent a repeat of the trading halts that closed down half the market amid last year’s rout.
Investors remain concerned about liquidity risks, the index provider said in a statement announcing a fresh round of discussions on whether to add mainland equities to its emerging- markets gauge. A decision is due in June.
