China Stocks Rise to Four-Month High, Led by China Cosco Gains

By Zhang Shidong and Chua Kong Ho

Feb. 9 (Bloomberg) -- China’s stocks climbed to a four- month high, led by China Cosco Holdings Co. after the Baltic Dry Index advanced for a 14th straight day. Beijing Capital Development Co. gained after home sales at China Vanke Co. rose.

China Cosco, the world’s largest operator of dry-bulk ships, rose the 10 percent limit as the Baltic Dry Index, a gauge of commodity shipping costs, advanced a 14th day, boosting prospects for rates generally. Beijing Capital, owned by the municipal government, added 5.8 percent after Vanke, the nation’s biggest developer, posted its first gain in home sales in eight months.

The benchmark Shanghai Composite Index rose 43.48, or 2 percent, to 2,224.71, the highest close since Sept. 26. The CSI 300 Index, which measures shares on both of China’s exchanges, advanced 2.7 percent to 2,296.67.

The rebound in shipping rates is “one of the indicators” that the economy is stabilizing, said Michelle Qi, a portfolio manager at Bank of Communications Schroder Fund Management, which oversees about $790 million. Property companies are cutting prices, increasing transaction volume and providing “more liquidity to fund other projects,” Qi said.

Jiangxi Copper Co. and Aluminum Corp. of China Ltd. both climbed by the maximum 10 percent daily cap after metals prices jumped.

The Shanghai Composite has gained 22 percent this year, making it the best-performing stock gauge in the world, after the government announced on Nov. 9 a 4 trillion yuan ($585 billion) spending plan to boost the world’s third-largest economy. The central bank has also cut the key lending rate five times since September to support industries and stem job losses.

Economic Growth

China’s economy grew 6.8 percent in the fourth quarter, the slowest pace in seven years. Corporate earnings for Chinese mainland-listed companies are expected to fall 17 percent this year, Thomas Deng, the Hong Kong-based head of China strategy at Goldman Sachs Group Inc., said in Shanghai today. That will limit the stock market rally, he said.

China Cosco surged by the 10 percent limit to 10.74 yuan, taking the stock to the highest since Oct. 9. Cosco Shipping Co. added 6.8 percent to 10.16 yuan. China Shipping Development Co., the nation’s biggest oil carrier, advanced 5.1 percent to 12.11 yuan.

The Baltic Dry Index rose 9.6 percent to 1,642 points on Feb. 6, according to the Baltic Exchange, on the expectation iron ore demand will rebound in China. That’s a 112 percent jump this year. The index collapsed in December to levels unseen in two decades as steel demand slumped and the world economy slowed.

China, Iron

Iron ore is the world’s most-shipped commodity. The steel industry accounts for almost half of all dry-bulk cargo, according to shipper Golden Ocean Ltd. Stockpiles in China, the biggest user of the material, have dropped 23 percent from a high in September.

Beijing Capital climbed 5.8 percent to 10.36 yuan. Vanke added 1 percent to 7.90 yuan. Sales gained 19 percent last month, the first advance in eight months, after the company cut prices to lure buyers, the company said in a statement today.

Poly Real Estate Group Co., China’s second-largest publicly traded developer, added 2.2 percent to 18.44 yuan. Gemdale Corp., a Chinese developer that partnered with ING Groep NV, rose 4.2 percent to 8.69 yuan.

Jiangxi Copper, China’s second-biggest producer of the metal, advanced the daily limit of 10 percent to 16.74 yuan. Yunnan Copper, the No. 3, surged 10 percent to 13.07 yuan. Aluminum Corp. of China, the nation’s biggest maker of the lightweight metal and also called Chalco, added 10 percent to 9.56 yuan.

Copper for April delivery on the Shanghai Futures Exchange rose the exchange-imposed 5 percent limit to 29,510 yuan a metric ton, the highest since Nov. 19, 2008. Shanghai aluminum gained as much as 3.3 percent to 12,220 yuan a ton, the highest since Jan. 12.

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

Beiqi Foton Motor Co. (600166 CH), China’s biggest commercial-vehicle maker, jumped 0.74 yuan, or the 10 percent limit, to 8.10 yuan. The stock was rated “outperform” in initial coverage, analyst Jiang Xueqing at Shenyin & Wanguo Securities Co. said in a report today. Beiqi Foton will continue to win orders for hybrid buses, she said.

China Petroleum & Chemical Corp. (600028 CH), Asia’s biggest oil refiner, also known as Sinopec, added 0.06 yuan, or 0.7 percent to 8.61. Sinopec aims to boost oil and gas output at its northwestern fields by as much as 67 percent in 2020, compared with 2015, to meet an expected increase in demand.

Zhejiang Leo Co. (002131 CH), a water pump manufacturer, surged 1.12 yuan, or 10 percent, to 12.33 on media reports China’s worst drought in five decades will boost sales.

To contact the reporters on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net; Chua Kong Ho in Shanghai at kchua6@bloomberg.net