China's Stocks Climb for Second Day; Baoshan, Banks Advance

By Chua Kong Ho

Aug. 29 (Bloomberg) -- China stocks rose, driving the benchmark index to its first weekly advance in five, as steelmakers and banks climbed after Baoshan Iron & Steel Co. and Bank of China Ltd. posted profit that beat analysts' estimates.

Baoshan, China's largest steelmaker, jumped almost 4 percent, the biggest gain in a week, and Bank of China, the nation's No. 3 lender, added 1.4 percent. Shandong Chenming Paper Holdings Ltd. rose 1.1 percent after forecasting nine-month earnings may double on increased production and prices.

The CSI 300 Index, which tracks yuan-denominated shares traded in Shanghai and Shenzhen, added 73.96, or 3.2 percent, to 2,409.82 at 2:01 p.m. local time, bring this week's gain to 0.3 percent. The CSI 300, down 55 percent this year, is the second- worst performing among the 89 primary indexes tracked by Bloomberg, as government measures to tackle inflation and record oil and commodity prices eroded profits.

``It's probably still too early to buy aggressively into the market but after the declines this year, there's not as much downside,'' said Michelle Qi, Shanghai-based portfolio manager at Bank of Communications Schroder Fund Management, which oversees about $790 million.

Chinese corporate profits rose 23 percent in the first half, excluding oil and power companies, JPMorgan Chase & Co. said in a report yesterday. That compares with a 31 percent growth in profits in 2007.

Baoshan, Chenming

Baoshan gained 0.26 yuan to 6.54 yuan, the second-biggest contributor to the CSI 300's advance. The Shanghai-based steelmaker said second-quarter profit rose 20 percent to 5.39 billion yuan ($790 million), according to figures derived from first-half numbers reported yesterday. This compares with a median forecast of 4.9 billion yuan in a Bloomberg survey. Shanxi Taigang Stainless Steel Co., China's biggest maker of the rust- resistant alloy, gained 4.2 percent to 7.76 yuan.

Bank of China advanced 0.04 yuan to 3.69. Second-quarter profit rose 15 percent to 20.5 billion yuan, the lender said. That beat the 41.2 billion yuan average estimate of seven analysts compiled by Bloomberg.

Bank of Communications Co., which reported a record gain in first-half income this week, rose 1.9 percent to 7.60 yuan. Financial companies accounted for 37 percent of the index's advance today.

Shandong Chenming rose 1.1 percent to 9.02 yuan. First-half profit more than doubled to 947.4 million yuan, the company said.

The Shanghai Composite Index added 1.8 percent to 2,392.89 and the Shenzhen Composite Index gained 2 percent to 655.35.

The following stocks also rose in China. Stock symbols are in parentheses after company names:

Sichuan New Hope Agribusiness Co. (000876 CH), an animal- feed producer, rose 0.53 yuan, or 7.1 percent, to 8.01, the most since Aug. 20, after first-half income climbed 12 percent to 239.1 million yuan.

Youngor Group Co. (600177 CH), a shirt maker, gained 0.54 yuan, or 5.7 percent, to 10.05, the most in a week, after first- half profit rose 49 percent to 1.94 billion yuan.

To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net