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Chinese mainland stocks advance for second day

(Bloomberg)
Updated: 2007-02-13 16:33

Chinese mainland stocks rose for a second day, with the benchmark heading for a two-week high. China Vanke Co. led property developers higher after Poly Real Estate Group Co. posted a 62 percent increase in earnings for 2006.

"Real estate developers are delivering earnings that meet expectations," said Charlie Chen, who invests US$1 billion in Chinese stocks for Fortis NV. "The market is now more focused on earnings growth prospect for sectors."

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TheShanghaiand Shenzhen Composite Index, which tracks yuan - denominatedA shareslisted on China's two exchanges, gained 25.99, or 1.1 percent, to 2511.38 at the 11:30am local-time break, set for the highest close since January 30.

China Vanke, the nation's biggest property developer, advanced 0.32 yuan, or 2 percent, to 16.23. Poly Real Estate, China's largest state-owned developer, advanced 2.53 yuan, or 5.6 percent, to 47.60. The company said net income jumped to 658.8 million yuan (US$85 million) last year from 407 million yuan in 2005, as it sold more houses and property prices rose.

The company also said it plans to sell as many as 350 million additional shares as it seeks 13.4 billion yuan to fund housing developments inBeijing, Shanghai and other cities.

"There are no investment risks for the company, no matter how fast it expands," said Wang Deyong, a Citic Securities Co. analyst in Beijing. "Poly's government ties enable the developer to better understand the market and policies," he added. Poly's net income may rise about 60 percent this year, he said.

Finance Street Holding Co., a developer in Beijing's financial district, rose 0.92 yuan, or 6.5 percent, to 15.10, extending yesterday's 10 percent gain, which is the daily limit. The company yesterday said profit last year rose 29 percent from a year earlier.

China's economic growth has averaged 10 percent a year for the past five years, fueling property demand and pushing up prices.