China’s stocks rose, extending the benchmark index’s quarterly rally, as growth in manufacturing showed the economy is withstanding increases in interest rates and other tightening measures.
Jiangxi Copper Co., the nation’s biggest copper producer, advanced for the first time in four days after manufacturing growth accelerated for the first time in four months. Zijin Mining Group Co. led gains for gold producers after saying rising precious metal prices are fueling expansion plans.
“Manufacturing growth shows the economy hasn’t yet been hurt by the tightening measures, easing concerns over possible slowdown,” said Tu Jun, a strategist at Shanghai Securities Co. “It’s a boost to investors’ confidence.”
The Shanghai Composite Index added 3.7, or 0.1 percent, to 2,931.84 at 9:33 a.m. The measure rose 4.3 percent last quarter, the most among Asia’s biggest stock markets. The CSI 300 Index gained for the first time in five days, rising 0.2 percent. China’s financial markets will be closed April 4 and 5 for national holidays.
The Purchasing Managers’ Index rose to 53.4 in March from 52.2 in February, the China Federation of Logistics and Purchasing said. The reading compared with the median forecast of 54 in a Bloomberg News survey of 17 economists. A reading above 50 for the PMI indicates an expansion.
Jiangxi Copper advanced 0.2 percent to 38.91 yuan. PetroChina Ltd., the nation’s largest oil producer, added 0.2 percent to 11.92 yuan.
Chinese stocks will extend gains as inflation concerns ease, according to RCM Asia Pacific Ltd. and Baring Asset Management.
Rate Outlook
Rate increases may slow after the central bank raised borrowing costs three times since October to cool inflation, according to Khiem Do, the head of Asian multi-asset strategy at Baring Asset’s Asia unit in Hong Kong, who said he’s buying banks and property shares. Technology and consumer companies are attractive, said Mark Konyn, chief executive officer at RCM, a unit of Allianz Global Investors.
“We are adding China names to regional portfolios and have been doing so over the past month believing that the market had started to form a base,” Konyn, who helps manage more than $15 billion at RCM in Hong Kong, said in an e-mailed response to questions. Inflation is likely to “level off” about mid-year and RCM has “positioned portfolios accordingly,” he said.
The central bank boosted reserve requirements for lenders nine times since the start of last year and pushed the benchmark one-year lending rate to 6.06 percent to counter inflation. Consumer prices rose 4.9 percent in January and February, exceeding the government’s full-year target of 4 percent, after hitting a 28-month high of 5.1 percent in November. All 20 economists in a Bloomberg News survey this month forecast another rate increase by the end of the second quarter.
Zijin Gains
China may raise interest rates to achieve positive real rates this year, China Securities Journal reported today, citing central bank adviser Xia Bin. March consumer prices may have risen more than 5 percent, the Shanghai Securities News said in its front page today, citing analyst reports.
Zijin Mining rose 1.1 percent to 7.69 yuan. China’s biggest gold producer plans to spend as much as 9 billion yuan this year for acquisitions and expansion as prices of the precious metal surge to a record. Zijin will set aside 4 billion yuan for buying rivals and between 4 billion yuan and 5 billion yuan for capital spending, Vice Chairman Lan Fusheng told reporters yesterday in Hong Kong.
