China's stocks rose for the first time in five days as healthcare and consumer companies rallied on the prospect they will benefit from uncertainty over government measures to cool asset bubbles.
Guangzhou Pharmaceutical Co added 3.6 percent and retailer Dashang Group Co jumped the 10 percent daily limit. Huaneng Power International Inc led gains for power suppliers after reporting higher profit.
"Small and medium cap stocks like drugmakers and retailers are the best place to shield from policy risks," said Zheng Tuo, president of Shanghai Good Hope Equity Investment Management Co.
The Shanghai Composite Index rose 30.64, or 1 percent, to 3,010.18 as of 1:16 pm local time, snapping a four-day, 5.9 percent decline. The CSI 300 Index gained 1.2 percent to 3,210.70. Futures on the CSI 300 expiring in May, the most active contract, added 0.6 percent to 3,234.6.
The Shanghai index has dropped 8.1 percent this year, the world's third-worst performer, on concern growth will slow after the government unwound monetary stimulus and announced measures to damp property prices.
Policy Beneficiaries
"Investor sentiment toward the banking, property and building materials sectors has turned significantly negative, while consumption, healthcare and new economy sectors are seen as potential beneficiaries of policy shifts," Jing Ulrich, chairwoman of China equities and commodities, said in a report today.
Ulrich joins Shenyin & Wanguo Securities Co and China International Capital Crop in recommending buying consumer- related stocks and avoiding financial companies.
Guangzhou Pharmaceutical advanced 3.6 percent to 13.63 yuan. Dashang Group Co surged 10 percent to 48.99 yuan. Beijing Wangfujing Department Store (Group) Co gained 5.1 percent to 36.64 yuan. Tianjin Tasly Pharmaceutical Co rose 3.3 percent to 29.70 yuan.
Measures tracking utilities and healthcare stocks climbed more than 2 percent today, the biggest gainers among the CSI 300's 10 industry groups.
Power Companies
Huaneng Power, the listed unit of China's largest power group, gained 2.9 percent to 7.13 yuan after posting a 41 percent increase in first-quarter profit to 952.8 million yuan on higher demand.
Datang International Power Generation Co, a unit of China's second-biggest electricity producer, surged 10 percent to 8.68 yuan.
The Se Shang Property Index rose 1.1 percent. The gauge has plunged 7.8 percent this week after the government limited loans for third-home purchases, increased down payment requirements and raised mortgage rates. It now trades at 19.8 times reported earnings, the lowest since February 2009, according to data compiled by Bloomberg.Gemdale, Vanke
Gemdale added 1.5 percent to 11.39 yuan, rebounding from its lowest level since May 2009. China Vanke Co, the nation's biggest listed property developer, rose 0.4 percent to 8.06 yuan, its first gain in six days.
Martin Currie's Chris Ruffle said in an interview this week Chinese real estate stocks are becoming "more attractive" as government measures drove valuations to a year-low and made interest rate increases less likely. China Asset Management Co, the nation's biggest mutual fund company, bought developers in its flagship fund in the first quarter, predicting "gentle" tightening this year, according to the company's website.
Economists are split on the timing of the nation's first interest-rate increase since 2007. Royal Bank of Canada said higher rates are likely this quarter and could come this month, while Bank of America-Merrill Lynch sees no move until the fourth quarter.
China's economy expanded 11.9 percent in the first quarter, the most in almost three years, fanning concern that record lending is creating asset bubbles.
