China’s Stock Futures Rise After Manufacturing Growth Quickens

Dec. 1 （Bloomberg） -- China’s stock-index futures rose after manufacturing growth quickened last month, signaling the nation’s tightening policy hasn’t curbed economic growth.

Futures on the CSI 300 Index expiring in December, the most active contract, gained 0.5 percent to 3,161.20 as of 9:19 a.m. local time. Anhui Conch Cement Co. may advance after cement prices in China increased to a record. Jiangxi Copper Co., the biggest maker of the metal, and Aluminum Corp. of China Ltd. may rise after the Purchasing Managers’ Index surged to 55.2 in November from the previously reported 54.7 in October.

China’s stocks will resume gains, boosted by manufacturing growth and fund inflows, Erwin Sanft, head of China and Hong Kong research at BNP Paribas, said in a Bloomberg Television interview. “The next couple of months are still going to see quite high PMI numbers,” he said.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, dropped 46.18, or 1.6 percent, to 2,820.18 yesterday, capping a 5.3 percent decline last month, the first drop since June.

China’s manufacturing expanded at the fastest pace in seven months in November, indicating the economy is strong enough for officials to keep tightening policy to fight inflation. The PMI figure was more than the 54.8 median estimate of 14 economists surveyed by Bloomberg News.

Inflation for November likely accelerated to 4.7 percent year-on-year, which may mark the “short-term peak,” Credit Suisse Group AG said in a report today. Inflation will accelerate again to hit 6.2 percent mid-2011, with the year- average forecast at 5 percent, as food, commodity and service prices increase, Credit Suisse economist Dong Tao said in the report.

The central bank will “probably” raise interest rates around Dec. 13, when the November inflation data are scheduled to be announced, the report said. Tao said he predicts interest rates to increase by about 150 basis points by end-2011.

Two-year contracts that exchange the central bank’s one- year deposit rate for a fixed payment climbed 58 basis points to 3.4 percent, the biggest monthly advance since April 2007, according to data compiled by Bloomberg. Over the past two months Standard Chartered Plc and Credit Agricole SA doubled projections for the number of increases in the deposit rate by mid-2011 to four.

The People’s Bank of China raised lenders’ reserve requirements for the fifth time this year on Nov. 19, a month after increasing its benchmark interest rate for the first time since 2007. Consumer prices in October were 4.4 percent higher than a year earlier, while Chinese banks’ yuan positions stemming from sales of foreign-exchange surged the most in 30 months, official figures show.

Chinese stock investors opened 388,107 accounts during the week ended Nov. 26, a decrease from 436,396 accounts the previous week, according to data posted on the website of the China Securities Depository and Clearing Corp.

“Investors have already priced in a ‘hard landing’ for the economy,” Sanft said. He recommended banks, railway construction companies, property developers as well as large-cap stocks.

Cement prices in China have increased to a record as curbs on electricity usage have limited production, the China Daily reported today, citing Liu Zuoyi, deputy secretary-general of the China Cement Association.

The average price of cement in China has risen to 400 yuan a ton, the Beijing-based newspaper reported. Shandong Shanshui Cement Group, the biggest cement producer in Shandong province, increased prices seven times within a month to 420 yuan a ton from 340 yuan a ton, the newspaper reported, citing the company.

The London Metal Exchange Index of prices for six industrial metals including copper and aluminum rose 1.6 percent yesterday.

--Irene Shen. Editor: Allen Wan