By Bloomberg News
June 8 (Bloomberg) -- China’s stocks rose, with the benchmark index advancing from a 13-month low, as consumer and technology companies gained on speculation their earnings will be most shielded from a slowdown in economic growth.
SAIC Motor Co. gained 1.1 percent as sales increased. Shaanxi Broadcast & TV Network Intermediary Co. jumped 10 percent after the Shanghai Securities News said the government will announce trials for merging media networks. Bank of China Ltd. slumped for a fifth day on concern fundraising will hurt shareholders’ stakes.
“Markets are very challenging at the moment,” Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada, said in a Bloomberg Television interview. “We think the best approach is just to wait it out to see how things develop in the next few months before you take on a lot of risk.”
The Shanghai Composite Index fluctuated between gains and losses before closing 0.1 percent higher at 2,513.95, rising from its lowest close since April 30, 2009. The CSI 300 Index added 0.1 percent to 2,699.34, with a measure of consumer discretionary stocks advancing the most.
The Shanghai index has retreated 24 percent this year, Asia’s worst performing market, on concern the property market is cooling and Europe’s debt threatens China’s exports.
SAIC gained 1.1 percent to 12.41 yuan after saying sales last month advanced 26 percent from a year earlier. FAW Car Co. added 2.1 percent to 16.28 yuan. Beiqi Foton Motor Co. rose 1.8 percent to 17.25 yuan.
Auto Sales
China’s passenger-car sales have risen every month since February 2009 after the government halved the consumption tax on small vehicles to 5 percent the preceding month, according to separate data from the China Association of Automobile Manufacturers. The tax was increased to 7.5 percent this year.
China is moving from growth led by exports to one driven by domestic consumption and investors can benefit by buying shares of multinationals with “exposure” to the country and selling industrial metal producers, according to Bank of America-Merrill Lynch Global Research.
Rising salaries are also “positive” for household spending, Royal Bank of Canada’s Jackson said.
Honda Motor Co. suffered its second strike in China in less than a month as workers at a plant partly owned by affiliate Yutaka Giken Co. walked out demanding higher pay, forcing the parts maker to close the factory. Foxconn Technology Group, which manufactures Apple Inc. iPhones, announced the base wage for factory workers in Shenzhen will double after worker suicides.
Broadcast Stocks
Demands for higher wages are fast becoming an issue in China and companies need to get used to it, said Jun Ma, an economist at Deutsche Bank AG.
Shaanxi Broadcast jumped by the 10 percent daily limit to 9.47 yuan. Huawen Media Investment Corp. rose 10 percent to 6.07 yuan and Chengdu Dr Peng Telecom & Media Group Co. also gained 10 percent to 9.94 yuan.
Broadcasters will be in charge of constructing the networks, the Shanghai Securities News reported. Telecom companies will be allowed to produce radio and TV programming, the newspaper reported, citing rules released by the State Council the beginning of this year.
Gains were limited as BofA Merrill Lynch Global Research cut their recommendations on China and Hong Kong stocks to “neutral” from “overweight” on speculation that policy easing may be “far away” and growth expectations will continue to fall.
China is now the most “overbought” market in Asia while its yield curve has narrowed “sharply” to 102 basis points from 160 basis points in mid-April, strategists led by Sadiq Currimbhoy said in a report dated yesterday.
Slowing Growth
The U.S. supplanted China and Brazil as the most attractive market for investors as confidence in the global economic recovery wanes in the wake of the Greek debt crisis, according to a pool of investors and analysts who are Bloomberg users.
China’s economic growth may slip to between 10 percent and 11 percent this quarter as industrial production and investment expand at a slower pace, a researcher for the cabinet said.
“The 11.9 percent growth rate in the first quarter won’t be sustained and the outlook for investment and export growth is uncertain,” Zhang Liqun, a researcher at the State Council’s Development and Research Center, said yesterday on the sidelines of an economic forum in Beijing.
Bank of China, the nation’s third-largest lender, slid 1.1 percent to 3.51 yuan. The stock has lost 14 percent since June 2 when the bank started selling 40 billion yuan ($5.9 billion) of convertible bonds to replenish capital drained by record credit growth last year.
The following stocks also rose or fell in China trading. Stock symbols are in parentheses after company names:
Shandong Blue Sail Plastic & Rubber Co. (002382 CH), a glove maker, rose 3.3 percent to 38.10 yuan. Citic Securities Co. recommended investors accumulate the stock, saying sales will accelerate.
Tsingtao Brewery Co. (600600 CH), China’s biggest brewery by market value, gained 1.2 percent to 36 yuan. The company may buy Foster’s brewing business, the Beijing-based Economic Observer reported on its website today, citing an unidentified person. Liz McLachlan, a Melbourne-based spokeswoman for Foster’s, declined to comment on the report when contacted.
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