Property developers, energy producers lead strong rally in stocks

By Irene Shen (China Daily)
Updated: 2010-12-22 11:04
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HONG KONG - China's stocks rose, led by property developers and energy producers, as military tensions on the Korean Peninsula eased and investors speculated that demand for housing and coal will be sustained.

China Vanke Co, the nation's biggest developer, surged to the daily 10 percent limit as a survey showed that property sales rose in most cities in the past week.

China Shenhua Energy Co led gains for energy companies after agreeing to pay $1.3 billion for assets from its parent and as oil prices increased.

Cosco Shipping Co surged the most in four months after Shenyin & Wanguo Securities Co upgraded the stock to "buy".

"There are opportunities in sectors with fair valuations such as property," said Zhou Xi, a strategist at Bohai Securities Co in Tianjin. "The fundamentals of the market haven't changed. Fluctuations will continue for the near term."

The Shanghai Composite Index climbed 1.8 percent to 2904.12 at the 3 pm close, the most in a week, and the CSI 300 Index gained 2.2 percent to 3249.51.

A gauge of developers in the Shanghai Composite Index rose 5.4 percent, the biggest gain in seven months. The property gauge has tumbled 23 percent this year.

Vanke surged 10 percent to 9.13 yuan ($1.37). Poly Real Estate Group Co advanced 10 percent to 13.51 yuan, paring its annual loss to 22 percent.'s research center said property sales volume rose 11 percent in Shanghai and surged 34 percent in Shenzhen and Hangzhou.

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More than 80 percent of the 35 Chinese cities tracked by the research center reported a rise in property transactions in the past week from the previous week, it said after the market close on Monday.

A gauge of energy producers jumped 4.2 percent, the most among the 10 industry groups in the CSI 300.

China Shenhua Energy Co Ltd, the unit of the nation's biggest coal producer, surged 6 percent to 25.77 yuan, the highest level since Oct 11 and the second-biggest contributor to gains on the Shanghai Composite.

The company said it will pay 8.7 billion yuan ($1.3 billion) for mining rights and companies controlled by State-owned Shenhua Group Corp.

The purchases will increase the listed company's recoverable coal reserves by 24 percent to 9.15 billion metric tons, the company said.

"Investors were expecting the company to buy more from the parent, but this will be taken as the start of more acquisitions," said Helen Lau, an analyst at UOB Kay Hian Ltd Hong Kong. "The parent has more large mining assets that it will inject into the listed company at some point."

PetroChina Co, the biggest oil company, advanced 1.9 percent to 11.52 yuan. China Petroleum and Chemical Corp, the second-largest and also known as Sinopec, rose 2 percent to 8.26 yuan. China Coal Energy Co advanced 3.7 percent to 11.42 yuan.

Oil rose 0.9 percent on speculation US economic growth will accelerate this year, bolstering demand in the world's biggest oil-consuming country.

Cosco Shipping, the unit of China's biggest shipping company, rose 5 percent to 8.35 yuan, the most since Aug 16.

China's stocks will probably do "reasonably well" heading into next year because of liquidity and as inflation concerns ease, said Michael Pettis, managing director at Shenyin & Wanguo.

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