China Stocks Rise as Commodity Producers Rally on Goods Orders

Sept. 27 （Bloomberg） -- China’s stocks rose, led by commodity producers, as a rebound in demand for U.S. capital goods eased concern the global recovery is faltering.

Jiangxi Copper Co. and Aluminum Corp. of China Ltd. advanced at least 1.4 percent after orders for U.S. capital equipment exceeded economists’ estimates. China Southern Airlines Co. rose to the highest since May after Kenneth Fisher, the billionaire chairman of Fisher Investments Inc., recommended the stock. China Vanke Co. and Poly Real Estate Group Co. led declines among developers on newspaper reports the government may start a trial of property tax next year and is probing the way banks implement second-home policy curbs.

“China’s export growth will still probably grow pretty fast this year as overseas demand isn’t supposed to a big drag on the economy,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “The risk appetite for stocks will come back.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, rose 10.23, or 0.4 percent, to 2,601.78 as of 9:45 a.m. local time. China’s markets were closed from Sept. 22 to Sept. 24 for the Mid-Autumn Festival. It will be shut again from Oct. 1 to Oct. 7 for the National Day holidays.

The Shanghai index has lost 21 percent this year as the government imposed tightening measures ranging from restrictions on multi-house purchases to a 7.5 trillion yuan （$1.1 trillion） annual limit on new lending by banks. The gauge has climbed 9.6 percent from this year’s low on July 5 on signs the nation’s economic slowdown is stabilizing.

U.S. Orders

A gauge of China’s material producers advanced 1.5 percent for the biggest gain among the 10 industry groups in the CSI 300. Jiangxi Copper, China’s biggest producer of the metal, added 1.7 percent to 29.98 yuan. Aluminum Corp. of China Ltd., the listed unit of nation’s biggest maker of the lightweight metal and also called Chalco, added 1.4 percent to 9.75 yuan.

Orders for U.S. capital equipment rebounded 4.1 percent in August from a 5.3 percent decline in July, figures from the Commerce Department showed on Sept. 24 in Washington. The median forecast of 11 economists surveyed by Bloomberg was for an increase of 3 percent.

China Southern gained 2.7 percent to 8.50 yuan after Fisher said the airline is a stock that investors can retain for “5 to 10 years.”

A gauge of property stocks fell 0.8 percent for the steepest decline in the Shanghai Composite. Vanke, the nation’s biggest listed property developer, slid 2.1 percent to 7.98 yuan. Poly Real Estate, the second biggest, dropped 1.6 percent to 10.61 yuan.

China may start a trial of property tax in some cities in 2011, the Economic Observer newspaper reported over the weekend, citing unidentified officials at the Beijing tax bureau. The program may be announced at the end of this year at the earliest, the official said. The cities of Shenzhen and Hangzhou could be among the first to try out the system, it said.

Property Curbs

China’s housing ministry and banking regulator are jointly probing the way commercial lenders implement second-home policy curbs in major cities, the China Business Journal reported on Sept. 25, citing an unidentified official at the housing ministry. The investigation, which was started in the middle of this month, will report its results after the holidays for policy makers to decide if policy changes are needed, it said.

China has entered a property bear market that will last for five years, with the average prices in larger cities likely to decline by half or more, Andy Xie, former Morgan Stanley economist, wrote in a commentary for Bloomberg News.