China's Stocks Climb; Coal Producers, Jiangxi Copper, Cosco Lead Advance

Aug 26, 2010 (Bloomberg)--

China stocks rose, as coal producers advanced on the prospect of mergers while companies from China Cosco Holdings Co. to Jiangxi Copper Co. climbed after reporting higher earnings.

China Shenhua Energy Co. gained 0.5 percent after Premier Wen Jiabao called for accelerated consolidation of the coal- mining industry. China Cosco, the world’s largest operator of dry-bulk ships, and Jiangxi Copper, the nation’s biggest producer of the metal, rallied at least 1.2 percent. China Life Insurance Co. sank the most in six weeks, limiting gains, after Citigroup Inc. said the company’s profits were “weak”.

'Investors will buy on dips,” said Wu Kan, Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million

"Companies are reporting good earnings and the government probably won’t intensify policy tightening. We are still in a range-bound pattern.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 6.90, or 0.3 percent, to 2,603.48 at the 3 p.m. close. The gauge lost 2 percent yesterday on signs the global recovery is faltering. The CSI 300 Index added 0.3 percent to 2,850.09.

The Shanghai gauge has rebounded 10 percent from this year’s low on July 5 as investors speculated the government would ease restrictions on real estate and allow more lending to counter a weaker economy. That’s pared this year’s loss to 21 percent, after the government increased down-payment requirements on home sales and ordered banks to set aside more deposits as reserves.
Coal Producers

Shenhua, the nation’s largest coal producer, rose 0.5 percent to 23.91 yuan, snapping a four-day losing streak. China Coal Energy Co., the second biggest, climbed 1.5 percent to 9.77 yuan. Datong Coal Industry Co., the third largest, added 1.4 percent to 16.41 yuan.

Premier Wen called for accelerated consolidation of the country’s coal-mining industry at a State Council work conference yesterday, the central government said on its website today. Wen also called for faster development of the river- shipping industry, the government said.

"The market is actively reacting to the call from the top management, which will benefit the coal industry in the long term,” Wu Jie, a coal analyst at Orient Securities Co. in Shanghai.
A measure of energy-related stocks gained 0.9 percent, the second-biggest advance among the 10 industry groups on the CSI 300 today.

Jiangxi Copper

China Cosco gained 1.2 percent to 9.89 yuan. Asia’s No. 1 shipping line by market value returned to profit in the first half as an economic rebound revived shipping rates. Net income was 3.45 billion yuan ($507.3 million), compared with a loss of 4.6 billion yuan a year earlier, the company said in a statement after markets closed yesterday.

Jiangxi Copper rallied 2.1 percent to 29.08 yuan. First- half profit surged 73 percent from a year earlier on higher output and prices, the company said, citing international accounting standards. Jiangxi Copper also said it plans to raise 6.75 billion yuan from exercising warrants issued in 2008 to fund projects in Peru and Afghanistan.

China Life, the nation’s biggest insurer, dropped 3.3 percent to 22.50 yuan, the biggest decline since July 12.

Citigroup analysts Darwin Lam and Zerlina Zeng said China Life’s profit trailed their estimates by 8 percent as premium growth slowed in the six months to June 30. Chairman Yang Chao lifted income from premiums by 12 percent through efforts to curb single-premium sales in favor of more-profitable longer- duration products.

"China Life remains our least preferred play in the sector due to its lackluster life operating trends, lack of property and casualty exposure and less gearing to a potential A-share market recovery than peers,” Lam and Zeng wrote in a note to clients today.