China’s benchmark stock index rose as a report showing China’s manufacturing may contract at a more moderate pace in October overshadowed concern the earnings outlook for resource companies is worsening.
Huaneng Power International Inc. led a gage of utility stocks in the CSI 300 Index to the biggest gain among 10 industry groups after BNP Paribas SA said profit growth will accelerate on weaker coal prices. China Eastern Airlines Corp. rallied 2.4% after UOB-Kay Hian Holdings Ltd. (UOBK) said the nation’s carriers will report “stellar” earnings on lower fuel prices. Yanzhou Coal Mining Co. dropped 1.6% after Barclays Plc downgraded the stock and UOB-Kay Hian said China’s coal industry may post “poor” earnings in the third quarter.
“China’s economy is recovering but at a very slow pace and there’s no sign of a big pick-up in growth,” says Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages about $120 million. “The index may trade in a narrow range.”
The Shanghai Composite Index (SHCOMP) added 0.1% to 2,115.99 at the close, even as 463 stocks declined and 459 gained. The CSI 300 fell 0.2% to 2,307.78. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong slid 0.7%. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, fell 1.3% in New York yesterday.
The Shanghai Composite had rebounded 5.6%since reaching a three-year low on Sept. 26 on expectations regulators will introduce measures to stabilize the market ahead of a once- in-a-decade power transition of the Communist Party. The Shanghai gage is still down 3.8% this year and trades at 10 times estimated earnings for this year, compared with the 17.8% since Bloomberg began compiling the weekly data in 2006.
Excerpted from Bloomberg News. Click here to read the full article.