China’s Stocks Advance Most in Two Weeks; Aluminum Corp. Gains

By Chua Kong Ho

March 4 (Bloomberg) -- China’s stocks rose, driving the benchmark index to its biggest gain in two weeks, on optimism the government will increase spending to boost the world’s third-largest economy.

Aluminum Corp. of China Ltd. gained 4.4 percent after the former head of the Statistics Bureau said Premier Wen Jiabao will announce a new stimulus package tomorrow at the opening of the annual meeting of lawmakers. China Vanke Co. rose 5.1 percent after the Guangdong provincial government unveiled measures to support the property market. Stocks also gained after the official manufacturing index climbed for a third month in February.

“It’s important for the Chinese government not to lose momentum in stimulating the economy,” said Winson Fong, who helps manage $2 billion at SG Asset Management H.K. Ltd. in the city. “It’s encouraging that the economy seems to be responding.”

The benchmark Shanghai Composite Index added 2.7 percent to 2,126.55 at the 11:30 a.m. local-time break, set for the biggest gain since Feb. 16. The CSI 300 Index, which tracks shares on both the Shanghai and Shenzhen exchanges, climbed 3.3 percent.

The Shanghai Composite has rallied 17 percent this year, the world’s best performer, on expectations the government’s 4 trillion yuan ($585 billion) spending plan will shield the economy from recessions in the U.S., Europe and Japan.

Wen will announce a new stimulus package tomorrow, former statistics bureau head Li Deshui said. Li spoke outside a meeting of the economic group of the Chinese People’s Political Consultative Conference in Beijing today. He didn’t say whether spending would be more than the 4 trillion yuan announced in November.

‘Likely’ Recovery

The government may double the spending plan after economic growth cooled to the weakest pace in seven years and 20 million migrant workers lost their jobs, according to Standard Chartered Bank Plc.

Aluminum Corp., the nation’s biggest producer of the metal, climbed 4.4 percent to 9.21 yuan. Jiangxi Copper Co. gained 6.9 percent to 16.26 yuan.

There are already signs the government’s spending is taking effect. The Purchasing Manager’s Index rose to a seasonally adjusted 49 in February from 45.3 in January, the China Federation of Logistics and Purchasing said today in an e-mailed statement. A reading below 50 indicates a contraction.

An economic recovery in the first half is “very likely,” central bank Vice Governor Su Ning told reporters yesterday. The government is “confident” of achieving its 8 percent growth target, Minister of Industry and Information Li Yizhong said.

Developers Climb

China Vanke, the nation’s largest developer by market value, gained 5.1 percent to 7.80 yuan. Poly Real Estate Group Co., the second-biggest developer, rose 6.7 percent to 19.5 yuan. Gemdale Corp. added 9 percent to 8.85 yuan.

The southern province of Guangdong will allow real estate developers to delay payments on land purchases for as long as two years as part of measures aimed at supporting the industry, according to a statement on the government’s Web site.

The following shares also rose or fell in China trading. Stock symbols are in parentheses after company names:

Chongqing Changan Automobile Co. (200625 CH), the manufacturer of Changan mini cars, added 5.7 percent to HK$2.98. The company said it will pay up to HK$3.68 per share to buy back as many as 423 million of its so-called B-shares.

Guangzhou Shipyard International Co. (600685 CH), a shipyard operator, climbed 6.5 percent to 17.67 yuan after the company and its unit Guangzhou Hongfan Information Technique Co. were designated “high-tech” enterprises by tax authorities in Guangdong for the years 2008-10. This allows them a tax rate of 15 percent, compared with 25 percent previously, Guangzhou Shipyard said.

SDIC Huajing Power Holdings Co. (600886 CH), a power generation company, gained 10 percent to 10 yuan after resuming trade for the first time since Dec. 8. The company said it will swap 7 billion yuan of shares for assets from its parent, according to a filing today to Shanghai’s stock exchange. The company will swap 825 million shares at 8.49 yuan each, it said.

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