China’s Stocks Rise to One-Month High; Sinopec Leads Advance

By Zhang Shidong

Jan. 19 (Bloomberg) -- China’s stocks rose to the highest level in almost a month on speculation government plans to extend support to the nation’s industries will revive earnings.

China Petroleum & Chemical Corp., also known as Sinopec, jumped 5 percent after the government said it is enacting stimulus plans for nine industries including petrochemicals. Guangdong Electric Power Development Co. advanced 5.3 percent as a newspaper said energy producers will receive state aid. Shanghai International Port (Group) Co., the operator of China’s busiest harbor, surged 9.9 percent after the central government agreed to help make Shanghai an international shipping hub.

The CSI 300 Index added 22.25, or 1.1 percent, to 2,012.47, the highest close since Dec. 22 and a second day of gains. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 1.7 percent to 1,986.67. The nation’s markets will be shut next week for Lunar New Year holidays, also known as the Spring Festival.

“Sentiment is improving as aid flows to different industries,” said Wu Kan, a fund manager in Shanghai at Dazhong Insurance Co., which oversees the equivalent of $285 million. “It’s possible the central bank will cut interest rates before the Spring Festival to prevent a further economic slowdown.”

The CSI 300 has advanced 11 percent this year, the world’s third-best performer, as the government signaled additional support measures to bolster growth. Premier Wen Jiabao pledged this month to increase a 4 trillion yuan ($585 billion) stimulus package to create employment and support the nation’s industries, while the central bank cut interest rates five times since September to encourage lending.

Slowing Growth

Concern the weakening economy will erode profits drove the index down 66 percent last year. Gross domestic product expansion may cool to 6.8 percent in the fourth quarter, the slowest pace in seven years, according to a Bloomberg survey of economists. The data is due to be released this week. Morgan Stanley yesterday cut China’s growth forecast in 2009 to 5.5 percent from 7.5 percent.

Sinopec, Asia’s biggest oil refiner, jumped 5 percent to 7.80 yuan, the biggest gain since Dec. 4. The stock lost 70 percent last year. PetroChina Co., the nation’s biggest oil company, added 2.4 percent to 10.57 yuan.

Petrochemicals companies are one of nine industries that will get aid, according to a statement by Li Yizhong, Minister of Industry and Information Technology, published late on Jan. 16. The others are: steelmakers, automakers, shipbuilders; makers of textiles, nonferrous metals and machinery; and light industry and information-technology companies.

Power Producers

Guangdong Electric Power, the biggest operator of power plants in the southern Chinese province bordering Hong Kong, gained 5.3 percent to 5.94 yuan. Power generators will get about 10 billion yuan in financial aid, the China Business newspaper said, citing a State Grid official it didn’t name.

Datang International Power Generation Co., a unit of China’s second-biggest electricity producer, added 4.4 percent to 7.05 yuan. The company said yesterday it generated 7.1 percent more power in 2008 from the year earlier. Shanghai Electric Power Co., supplier of a third of the electricity in China’s richest city, rose 1.9 percent to 3.27 yuan.

Shanghai Port advanced 9.9 percent to 3.78 yuan, the steepest gain since Sept. 19. China’s central government has agreed to support Shanghai’s efforts to become an international shipping center, Mayor Han Zheng said at a Jan. 17 briefing. That support may lead to greater investment in the city’s port facilities, said Shanghai-based analyst Xu Xiang at Northeast Securities Co. Xu rates the stock “neutral.”

The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.

Anhui Jianghuai Automobile Co. (600418 CH), the unit of China’s second-biggest light-truck maker, lost 0.07 yuan, or 2.2 percent, to 3.11, the most since Dec. 23. The company said profit may have fallen more than 50 percent last year on increased costs and lower sales.

China Coal Energy Co. (601898 CH), the nation’s second- largest coal producer, added 0.11 yuan, or 1.5 percent, to 7.56. Parent China National Coal Group said it boosted its profit by 42 percent because of higher output and prices.

Sichuan Changhong Electric Co. (600839 CH), China’s second- biggest television maker, added 0.13 yuan, or 3.6 percent, to 3.72, its highest close since Dec. 19. Changhong said its parent sold 29.7 million shares in the company to International Business Machines Corp.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net