China's Stocks Rise as Greek Poll Overshadow Home Price Slump - Businessweek

China’s stock-index futures rose as concern over Greece exiting the euro eased after projections showed politicians that support a bailout won enough seats to control parliament.

Futures on the CSI 300 Index (SHSZ300) expiring in July, the most active contract, gained 0.7 percent to 2,577 as of 9:18 a.m. local time. SAIC Motor Co. and BYD Co., the automaker backed by billionaire investor Warren Buffett, may advance after the Economic Information Daily reported China will exempt new energy vehicles and plug-in hybrid models from a sales tax.

The Shanghai Composite Index (SHCOMP) rose 0.5 percent to 2,306.85 on June 15, capping a 1.1 percent advance last week. The CSI 300 Index added 0.3 percent to 2,568.05 on June 15. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, advanced 1.6 percent in New York.

Concerns that a growth slowdown is deepening and Greece will leave the euro area have pushed the Shanghai index down 6.3 percent from this year’s high set on March 2. Stocks in the measure are valued at 10 times estimated earnings, compared with the five-year average of 17.8, Bloomberg weekly data showed.

China’s economy will bottom out this quarter and rebound in the following three months as government measures to stabilize a slowdown take effect, Chen Yulu, an academic adviser to the nation’s central bank, said in an interview at a forum in Beijing on June 16. Full-year growth “should be able to hold up above 8 percent,” he said.

Greek Poll

Policy makers in the world’s second-biggest economy are shoring up expansion as Europe’s deepening debt crisis curtails exports and foreign investment, and property curbs at home damp demand.

The New Democracy and Pasok parties took 162 seats in the 300-member parliament, according to the official projection by the Interior Ministry in Athens based on 95 percent of the votes. The results eased concern that Alex Tsipras’s Syriza party would take control of the Greek government and reject austerity measures needed to qualify for international aid.

Foreign direct investment in China was almost unchanged at $9.23 billion in May from a year earlier as the economy cooled, the yuan weakened, and Europe’s debt crisis roiled financial markets.

The number was 0.05 percent higher than a year earlier, the Ministry of Commerce said on its website on June 15. That compared ith a 0.7 percent decline in April.

Sales Tax Exemption

China will exempt new energy vehicles and plug-in hybrid models from a sales tax under a development plan that will be announced by the State Council in the near term, Economic Information Daily reported today, citing information from an energy vehicle conference.

Citic Heavy Industries Co., the heavy machinery unit of China’s largest conglomerate, plans to sell as many as 685 million shares in a Shanghai initial public offering this month to help finance projects, according to a stock exchange filing on June 15.

The iShares FTSE China 25 Index Fund (FXI) (FXI), the biggest U.S.- listed China exchange-traded fund, jumped 2.1 percent on June 15 to a one-month high of $34.39, completing its third weekly advance. The Standard & Poor’s 500 Index added 1 percent to 1,342.84, pushing its weekly gain to 1.3 percent.

Baby Products

AsiaInfo-Linkage Inc. (ASIA) (ASIA) rose 21 percent to $12.79 in New York last week, the sharpest gain in more than four months.

The Beijing-based company, which sells telecommunications software to China’s biggest wireless carriers, may become the target of an acquisition (ASIA) by private-equity investors including Silverlake, TPG Capital and Primavera Capital, Reuters reported, citing people familiar with the deal. The deal valued at more than $1 billion, it said.

Jimmy Xia, the company’s investor relations director, didn’t immediately return a phone call and e-mailed request made after hours seeking comment on the news report. Phone messages left at the company’s office in Santa Clara, California, were also not immediately returned.

E-Commerce China Dangdang Inc. (DANG) (DANG), the country’s biggest Internet book retailer known as Dangdang, jumped 14 percent on June 15, the most since Jan. 27. It’s surged 21 percent for the week and 34 percent for the month.

The company has reached an agreement with Tencent Holdings Ltd., China’s biggest Internet company, to run book and baby products sales in its online store, the Chinese-language National Business Daily reported June 13, citing unidentified people at both companies. Tencent plans to invest $1 billion in its e-commerce unit, it said in a May 24 statement.

‘Impact of Easing’

The Asian nation boosted its holdings of U.S. government securities in April for the first time in three months to $1.1455 trillion, U.S. Treasury Department data released June 15 showed.

“Typically, when you start to see signs of easing, they continue for a while,” Timothy Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York, which manages about $2 billion in assets, said by phone on June 15. “There’s a lag between easing attempts and the impact of that easing on the economy.”

Suntech Power Holdings Co. (STP) (STP), the world’s largest solar-panel maker, advanced 14 percent for the week to $1.84. Trina Solar Ltd. (TSL) (TSL), the world’s fourth-largest, rose 9.1 percent at the end of last week to $6.59.

Jerry Stokes, Suntech’s European unit president, said in a June 14 interview that Germany may install between six and seven gigawatts of solar devices this year. Chancellor Angela Merkel’s government wants to reduce the pace of annual installations by about half after new projects peaked at 7.5 gigawatts last year.

China Eastern Cut

Trina Chief Executive Officer Jifan Gao said in a separate interview on the same day that “it’s possible” the market in Germany will reach that level.

LDK Solar Co., the world’s second-largest maker of wafers, surged 8 percent to $2.17 in its second day of gains. Yingli Green Energy Holding Co., the sixth-largest silicon-based solar module producer, climbed 9.2 percent to $2.84.

American depositary receipts of China Southern Airlines Co., Asia’s biggest air carrier by passengers, sank 7.1 percent to $20.20 to trade 7.3 percent lower than (ZNH) its Hong Kong stock.

Davin Chunpong Wu, an analyst at Credit Suisse, cut his recommendations on China Southern to underperform from outperform on June 15.

Cnooc Ltd. (CEO) (CEO), China’s biggest offshore oil explorer, increased 4.6 percent to a one-month high of $198.27 in U.S. trading. The ADRs, each representing 100 underlying shares in the company, traded 1.2 percent above (CEO) its Hong Kong stock, the highest premium in three days.

-- Editor: Allen Wan

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net