China s stocks rose for a fourth day on speculation fresh earthquakes in Japan will boost demand for non-nuclear energy and local governments will set targets for housing prices that are higher than analysts estimates.
A gauge of real-estate companies jumped the most in two weeks, led by China Vanke Co., the nation s biggest listed developer. TBEA Co., a manufacturer of electrical transformers, and solar cell maker Zhejiang Sunflower Light Energy Science & Technology Co. jumped more than 3 percent after a series of temblors struck near Japan s crippled nuclear power station.
In general, stocks valuations are low and that s enough to attract buying interest for bargains, said Luo Bin, general manager at Shanghai Mingyu Xiaoyang Investment Management Co., which manages the equivalent of $60 million. Japan s earthquake wouldn t pose too big a problem to China s economy.
The Shanghai Composite Index, which tracks the bigger of China s stock exchanges, gained the most in a week, rising 29.3, or 1 percent, to 2,948.48 at the 3 p.m. close. The measure trades at 13.8 times estimated earnings, near the record low of 11.9 set in January 2006, according to weekly data compiled by Bloomberg. The CSI 300 Index (SHSZ300) rose 1.3 percent to 3,264.93 today.
The Shanghai Composite has climbed 5 percent this year on optimism the world s second-biggest economy will withstand tighter monetary policies. The central bank has raised interest rates three times since October to cool inflation that reached 4.9 percent in February, exceeding the government s 4 percent annual target. It has boosted banks reserve requirements nine times since the start of 2010, including an increase on March 18.
New Temblors
A gauge of 34 real estate stocks on the Shanghai Comosite jumped 2.7 percent, the most since March 4 and the biggest gain among the five industry groups. Vanke rose 2.4 percent to 8.50 yuan. Poly Real Estate Group Co., the second largest, advanced 3.9 percent to 13.29 yuan.
There s market speculation that local governments will set a target of limiting housing price gains to between zero percent and the GDP growth rate, said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. That s much better than the target of below zero percent anticipated by the market. Local governments may announce their price control targets next week, Wang said.
China s State Council, or the cabinet, ordered local governments in January to set pricing control targets for newly built houses while raising the minimum down payment for second- home purchases.
Japan s Nikkei 225 (NKY) Stock Average slumped 1.7 percent today. A series of earthquakes struck near a crippled Fukushima nuclear plant this morning, starting with a magnitude 6.0 temblor this morning. Quakes of magnitude 4.1, 5.8, 4.9 and 4.3 followed, according to Japan s Meteorological Agency.
China has suspended approvals of new nuclear projects after the March 11 temblor and ensuing tsunami caused damage to the Fukushima nuclear power plant in Japan, stoking speculation demand for thermal and solar power will increase.
Alternative Energy
TBEA jumped 4.6 percent to 21.79 yuan. XJ Electric Co., a manufacturer of power transmission equipment, advanced 5 percent to 38.13 yuan.
Zhejiang Sunflower added 3.4 percent to 28.18 yuan. Haitong Food Group Co., through which Changzhou Eging Photovoltaic Technology Co. plans a backdoor listing, climbed 1 percent to 54.86 yuan. Changzhou Eging makes solar panels.
China Shenhua Energy Co., the nation s largest coal producer, rose 2 percent to 28.75 yuan. Yanzhou Coal Mining Co., the listed unit of China s fourth-biggest coal miner, climbed 4.7 percent to 33 yuan.
Crude for May delivery dropped as much as 59 cents to $104.38 a barrel in electronic trading in New York. It was at $104.47 at 2:10 p.m. Singapore time. Oil advanced earlier today as a U.S.-led alliance prepared to direct more attacks in Libya, the holder of Africa s largest crude reserves.
Rate Outlook
China may increase its benchmark interest rates within weeks as unrest in the Middle East drives up oil prices and reconstruction in Japan threatens to boost raw-material costs.
Mizuho Securities Asia Ltd., Citigroup Inc., and UBS AG predict the nation s fourth increase in six months before the end of April. All 20 economists in a Bloomberg News survey forecast a move by the end of the second quarter.
Emerging-market stocks may start outperforming developed- world equities as the economic slowdown policy makers engineered from countries such as China paves the way for sustainable growth, according to Wells Capital Management.
A ratio of the MSCI Emerging Markets Index to the Standard & Poor s 500 reaches so-called consolidation in the aftermath of global recession before rallying, according to James Paulsen, chief investment strategist at Wells. In such a period, emerging markets match or underperform the broader market.
Cross-border EFTs
Bosera Asset Management Co. and Hua An Fund Management Co. plan to introduce exchange-traded funds in China that track U.S. and U.K. stocks, a move that may improve investment returns and slow Chinese currency gains.
Bosera, which oversees $28 billion, proposed an ETF linked to the Standard and Poor s 500 Index, Jim Wang, chief investment officer of ETF and Quantitative Investment, said in an interview at a conference in Shanghai yesterday. Hua An plans to introduce an ETF linked to the FTSE 100 Index (UKX), said David Xu, whose company oversees $12.6 billion. The ETF may be introduced later this year or in the first half of 2012.
