China’s Stocks Rise Most in Six Months; Citic Securities Gains

By Bloomberg News

Sept. 3 (Bloomberg) -- China’s stocks rose for a third day, driving the Shanghai Composite Index to its biggest gain in six months, on speculation regulators will adopt measures to boost the nation’s equities following declines in the past month.

Citic Securities Co., the country’s largest brokerage, jumped 6.6 percent and Poly Real Estate Group Co. surged 8.2 percent after newspapers highlighted comments by Liu Xinhua, vice chairman of the China Securities Regulatory Commission, that regulators will promote a “stable and healthy” market. Aluminum Corp. of China Ltd. rose 9.6 percent after Alcoa Inc. said Chinese demand for aluminum will increase this year. Zijin Mining Group Co. rallied 9.2 percent after gold climbed.

The benchmark index climbed 130.05, or 4.8 percent, to 2,845.02 at the close, the most since March 4. The three-day gain almost erased a 6.7 plunge on Aug. 31. The gauge tumbled 22 percent last month on concern slowing loan growth will stifle economic expansion. The CSI 300 Index, measuring Shanghai and Shenzhen exchanges, rose 5.6 percent to 3,051.96.

“The regulator’s comment has prompted speculation the government may take steps to support the market,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which manages about $285 million.

Liu’s comments, made at a financial forum in Beijing yesterday, were featured on today’s front pages of the China Securities Journal and the Shanghai Securities News, the nation’s biggest financial newspapers.

Citic Securities advanced 6.6 percent to 26.56 yuan, the most since July 6. Poly Real Estate, China’s second-largest developer by market value, gained 8.2 percent to 23.82 yuan. Baoshan Iron & Steel Co., the nation’s biggest steelmaker, rose 7 percent to 6.43 yuan after losing 33 percent in August.

August Slump

The Shanghai stock index slumped the most since October last month as banks reined in lending to avert asset bubbles and policy makers advised industries such as steel and cement to curb overcapacity. The drop stopped a rally that sent the measure up 103 percent from a November low on prospects a 4 trillion yuan ($586 billion) stimulus package and record lending would revive growth in the world’s third-largest economy.

The government may take measures to stabilize the market before the 60th anniversary of the founding of the People’s Republic of China on Oct. 1, the start of a weeklong holiday.

“They want everything to be stable and in harmony,” said Francis Lun, general manager of Fulbright Securities Ltd., in an interview with Bloomberg Television today. “They will approve more stock market funds and allow them to buy into the market.”

Plunging equity markets last year forced regulators to impose a moratorium on domestic initial public offerings. The nine-month ban on sales was lifted in June as stocks recovered.

Alcoa Forecast

Aluminum Corp. of China, the nation’s largest aluminum producer and also known as Chalco, advanced 9.6 percent to 13.47 yuan. Alcoa expects China’s consumption of the material to rise 4 percent this year, compared with Alcoa’s previous prediction of zero growth, Chief Executive Officer Klaus Kleinfeld said in an interview in New York.

Zijin Mining, the biggest gold producer, surged 9.2 percent to 8.79 yuan. Zhongjin Gold, the No. 2, climbed the 10 percent daily limit to 52.31 yuan. Gold futures for December delivery rose 2.3 percent yesterday in New York, the most since March 19. Gold for immediate delivery rose 2.4 percent at 3:58 p.m. Shanghai time.

SAIC Motor Co., the Chinese partner of General Motors Co., gained 6.7 percent to 18.55 yuan after GM said full-year sales in China may rise more than 40 percent as tax cuts and stimulus measures helped double demand in August.

Chongqing Changan

Chongqing Changan Automobile Co., the Chinese partner of Ford Motor Co. and Mazda Motor Corp., added 7.4 percent to 10.25 yuan. Changan Ford Sales Co., a Ford venture, said sales in August rose 111 percent to 21,127 units.

China Railway Construction Corp. gained 3.6 percent to 9.24 yuan. The builder of more than half the nation’s railroads expects to beat its full-year sales target as the government boosts infrastructure spending to help revive the economy.

“We are the beneficiary of a once-in-a-hundred-years opportunity,” Vice Chairman Ding Yuanchen said yesterday.

China’s decision makers should refrain from shifting abruptly from their moderately loose monetary policy to a tightening stance as concerns about inflation are “excessive,” Ba Shusong, deputy head of financial research at the Development Research Center, which advises the State Council, said in Beijing yesterday.

Premier Wen Jiabao on Sept. 1 reiterated the government will stick to its pro-active fiscal policy and moderately loose monetary policy.

--Zhang Shidong. With assistance from Zhang Dingmin in Beijing. Editors: Richard Frost, Reinie Booysen

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-7014 or szhang5@bloomberg.net
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