China's Stocks Gain as Valuations Hit Two-Year Low; Citic Rises

By Chua Kong Ho and Zhang Shidong

July 3 (Bloomberg) -- China's stocks rose, as some investors took advantage of the lowest valuations in almost two years to buy shares.

Jiangxi Copper Co. surged by the daily 10 percent limit after copper climbed to a record yesterday in London. Citic Securities Co., the country's second-largest brokerage by value, climbed for the first time in six days.

The CSI 300 Index, which tracks yuan-denominated shares in Shanghai and Shenzhen, gained 47.25, or 1.8 percent, to 2,746.85 at the 11:30 a.m. local-time break. Nine of the 10 industry groups rose, with about 21 stocks gaining for each that declined.

The benchmark earlier dropped as much as 3.1 percent, sending the CSI 300 Index down 50 percent for the year. The 300 stocks on the gauge are valued at an average 20 times reported earnings, the lowest since August 2006.

``The market has already dropped to a point most investors think of as reasonable,'' said Wu Kan, a fund manager in Shanghai at Dazhong Insurance Co., which oversees the equivalent of $285 million. ``Stocks are falling too much and now people are betting on a rebound.''

The Shanghai Composite Index, a measure of stocks traded in the larger of China's two exchanges, advanced 1.3 percent to 2,685.98. The Shenzhen Composite Index gained 2.9 percent.

To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at Kchua6@bloomberg.net