China’s Stocks Rise Most in Month on Profit, Economy

China's stocks rose the most in a month after companies from Qingdao Haier Co. (600690) to Northeast Securities Co. reported higher profit and a government economist forecast growth will rebound this year.

Qingdao Haier, China's biggest refrigerator maker, advanced 1.9 percent. Northeast Securities capped its biggest weekly gain in two months. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. (600111), the largest producer of the metal, paced a rebound for material stocks before the release of earnings today. China Southern Airlines Co., whose profit gets a boost from a stronger yuan, added 2 percent on speculation the currency will gain after the central bank signaled plans to widen a trading band.

"Listed companies will achieve profit growth in the first quarter and that'll provide support," said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai. "The slowdown in the economy and expectations about tightening liquidity have already pretty much been priced into stocks."

The Shanghai Composite Index (SHCOMP) climbed 2.1 percent to 2,244.64 at the close, capping its biggest gain since March 20. It rose 1.7 percent this week. The CSI 300 added 2.8 percent to 2,533.83. The Hang Seng China Enterprises Index (HSCEI) advanced 2.4 percent.

Still, the Shanghai Composite has dropped 7.8 percent from a Feb. 6 high, with losses triggered by concern measures to cool property prices will hurt economic growth. Valuations on the Shanghai gauge are 9.2 times projected 12-month earnings, compared with the seven-year average of 15.8, data compiled by Bloomberg show.

Brokers Gain

Chinese stocks extended gains today after the Shanghai Securities News reported that regulators are studying plans that would allow A shares to be added to international "well-known" indexes to lure overseas funds. There's market speculation that MSCI Inc. is contacting "relevant departments" about adding A shares to the MSCI Emerging Markets Index, the report said, without saying where it got the information.

A Beijing-based press official at the China Securities Regulatory Commission, who declined to be named because of the agency's policy, and Melita Renee Eclavea, a Philippines-based marketing communications official at MSCI, said they could not immediately comment on the report.

Northeast Securities rose 3 percent to 18.74 yuan, adding to an 8.7 percent advance for the week. First-quarter net income jumped 280 percent from a year earlier, the brokerage said in an exchange statement yesterday.

Citic Securities Co. (600030), China's biggest listed brokerage, climbed 5.5 percent to 12.82 yuan. Haitong Securities Co., the second largest, rose 4.4 percent to 10.91 yuan.

Qingdao Haier advanced 1.9 percent to 13.46 yuan after saying profit increased 16 percent in the first quarter.

Growth Outlook

Zhu Baoliang, head of the State Information Center's economic forecast department, said the nation's economy may rebound in the second and third quarters of the year.

China should stabilize money supply growth and loosen fiscal policy to boost economic growth, Zhu said at forum in Beijing. The center is a research institute under the National Development and Reform Commission, China's top economic planner.

Trading volumes in the Shanghai index were 16 percent higher than the 30-day average today, according to data compiled by Bloomberg. Thirty-day volatility was at 16.6, near the lowest level since Dec. 4.

China Southern, the nation's biggest carrier by fleet size, gained 2 percent to 3.63 yuan. Air China Ltd. (601111), the largest international carrier, added 1.3 percent to 5.51 yuan.

Yuan forwards were within 0.1 percent of a record high and set for a fourth weekly gain after the central bank said the currency's trading band will be widened soon. The band is likely to be increased "in the near future," the central bank's Deputy Governor Yi Gang said April 17 in Washington.

Yuan Prospects

"It seems that China's government intends to reform the currency," said Lewis Wan, Hong Kong-based chief investment officer at Pride Investments Group Ltd., which oversees about $250 million.

A gauge of material stocks in the CSI 300 added 2.5 percent, rebounding from two days of losses. The 14-day relative strength measure for the sub-index, measuring how rapidly prices have advanced or dropped during a specified time period, was at 27.8 yesterday. Readings below 30 indicate it may be poised to rise.

Baotou Rare-Earth rose 2.8 percent to 28.48 yuan. The company may turn to profit in the first three months of the year from a fourth-quarter loss, according to data compiled by Bloomberg.

The Bloomberg China-US 55 Index (CH55BN), the measure of the most- traded U.S.-listed Chinese companies, added 0.2 percent in New York yesterday. Spreadtrum Communications Inc. (SPRD) gained after Bank of America Corp. said rising smartphone use will boost Asian semiconductor makers.