By Zhang Shidong
Nov. 10 (Bloomberg) -- China's stocks jumped the most in seven weeks, led by building material and construction companies, after the government pledged 4 trillion yuan ($586 billion) to bolster the world's fourth-largest economy.
Baoshan Iron & Steel Co., China's biggest steelmaker, and Anhui Conch Cement Co., the largest cement maker, jumped by the 10 percent daily limit on speculation the stimulus package will spur construction projects. Sany Heavy Industry Co. and Changsha Zoomlion Heavy Industry Science & Technology Development Co., the nation's two largest makers of machinery for handling concrete, also surged by the maximum.
The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, climbed 123.84, or 7.4 percent, to 1,801.67 at the close. About a quarter of the 300 stocks on the measure surged by the 10 percent daily cap and only two fell.
``The plan is what the market would like to see most: Something concrete that will be good for the economy,'' said Zheng Tuo, who manages $790 million at Bank of Communications Schroders Fund Management Co. in Shanghai. ``If economic growth can reach 8 percent next year, stocks are undervalued.''
Zheng said he has been adding bank stocks to his holdings, because of low valuations.
Stocks today gained the most since Sept. 19, the day after the government scrapped a tax on stock purchases and asked state-owned parents to increase holdings in their listed units.
Baoshan, Anhui Conch
The CSI 300 has slumped 66 percent this year, Asia's worst- performing benchmark index, on concern demand for Chinese products will decline as the global credit crisis drags the world economy toward recession. The measure on Nov. 4 dropped to 11.41 times reported earnings, the lowest since its creation in 2005.
Baoshan Steel surged 10 percent to 5.04 yuan. Anhui Conch climbed 10 percent to 20.74 yuan. Sany Heavy also jumped by the maximum to 13.13 yuan. Zoomlion Heavy Industry surged by the limit to 10.11 yuan.
Wuhan Iron & Steel Co., China's third-biggest steelmaker by value, gained 10 percent to 5.01 yuan. China Railway Group Ltd., Asia's largest construction company, advanced 10 percent to 5.18 yuan. China Railway Construction Corp., builder of more than half the nation's rail links since 1949, surged 10 percent to 9.02 yuan.
The government's stimulus funds, equivalent to almost a fifth of China's gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council, or China's Cabinet, said yesterday on its Web site.
Stimulus Package
The package, of which 100 billion yuan is earmarked for this quarter, will be spent on low-rent housing, roads, railways and airports and infrastructure in rural areas. The government will allow tax deductions for purchases of fixed assets such as machinery to stimulate investment, a move that will reduce companies' costs by an estimated 120 billion yuan.
China may increase money supply and cut interest rates again as part of the plan, central bank Governor Zhou Xiaochuan said in Sao Paulo yesterday. The central bank has cut interest rates three times since September.
Industrial & Commercial Bank of China Ltd., the nation's biggest listed lender, rose 5.8 percent to 3.99 yuan. China Construction Bank Corp., the No. 2, added 7.3 percent to 4.39 yuan. China Merchants Bank Co., the biggest dual-currency credit-card issuer, advanced 9.5 percent to 13.71 yuan.
``Banks will also participate in financing the infrastructure projects,'' said Frank Gong, Hong Kong-based head of China equity research at JPMorgan Chase & Co. ``So they won't need to worry about loan growth.''
Composite
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, gained 7.3 percent to 1,874.80. The Shenzhen Composite Index rose 6.4 percent to 497.35.
The following companies were among the most active in China's markets. Stock symbols are in brackets after companies' names.
Automakers: China's government is discussing policies to help automakers boost sales and fend off the global financial crisis, the country's top planning agency said on Nov. 8. The government is analyzing policy options including consumption-tax breaks and subsidies to automakers that develop vehicles powered by alternative energies, it said.
SAIC Motor Co. (600104 CH), China's largest carmaker, rose 0.48 yuan, or 9.5 percent, to 5.51. Dongfeng Automobile Co. (600006 CH), which makes light trucks in China with Nissan Motor Co., gained 0.17 yuan, or 6.7 percent, to 2.70. Jiangling Motors Corp. (000550 CH), the Chinese commercial vehicle partner with Ford Motor Co., added 0.45 yuan, or 6.5 percent, to 7.37.
Beijing DHC Digital Technology Co. (002065 CH), the manufacturer of industrial application software, advanced 0.62 yuan, or 6.9 percent, to 9.60. The company was initiated with a ``buy'' rating at Bohai Securities Co.
PetroChina Co. (601857 CH), Asia's biggest oil producer, rose 0.71 yuan, or 6.8 percent, to 11.22. PetroChina will maintain its pace of capital spending next year at 2008 levels. Expenditure in 2009 ``won't decrease or increase,'' Chairman Jiang Jiemin said while attending an energy conference in Beijing.
Shanxi Guoyang New Energy Co. (600348 CH), a coal producer in the northern province of Shanxi, jumped 0.87 yuan, or the 10 percent daily cap, to 9.56. The stock was initiated with a ``neutral'' recommendation at United Securities Co.
Zhejiang Wanfeng Auto Wheel Co. (002085 CH), the listed unit of the world's biggest maker of aluminum-alloy wheels, advanced 0.24 yuan, or 7.1 percent, to 3.64. Parent Wanfeng Automobile Group said crimped demand for auto parts on slowing Chinese and U.S. car sales offers an opportunity to make acquisitions.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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