China Stocks Rise to Three-month High as Oil Drops, Vanke Gains
China’s stocks rose, erasing earlier losses and driving the benchmark index to a three-month high, as property developers and automakers climbed after China Vanke Co reported higher earnings and oil prices declined.
Vanke, the largest developer, advanced 1.8 per cent after posting a 2010 profit that exceeded analysts’ estimates. Beiqi Foton Motor Co, China’s biggest commercial-vehicle maker, led an advance by automakers as crude slid from a 29-month high. Anhui Conch Cement Co dropped from its highest level in three years after Goldman Sachs Group Inc recommended investors “take profit” in the nation’s cement producers.
“Corporate earnings are still growing fast and falling oil prices will help with imported inflation,” said Zhang Ling, general manager at Shang- hai River Fund Management Co. “Still, fighting inflation is going to be a tough job this year.”
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, gained 3.73, or 0.1 per cent, to 2,999.94 at the 3 pm close, the highest since November 15 and reversing an earlier 0.7-per cent loss. The CSI 300 Index added 0.1 per cent to 3,337.46.
The Shanghai index has rallied 12 per cent from this year’s low on January 25, making it the best performer among Asia’s major markets in 2011, on signs the world’s second-biggest economy is withstanding monetary tightening. Manufacturing output is still growing even as the central bank boosted banks’ reserve requirement ratio eight times since the start of 2010 and raised interest rates three times. Inflation slowed to 4.9 per cent in January from a 28-month high of 5.1 per cent in November.
Premier Wen Jiabao targeted inflation as the nation’s top economic priority this year during his March 5 annual state-of- the-nation address to the legislature.