Chinese stocks jumped the most in two months as industrial companies surged amid speculation of state-fund buying and traders weighed weaker-than-estimated economic data against prospects for increased stimulus.
The Shanghai Composite Index rallied 3.1 percent to 3,005.1 at 1:40 p.m., heading for its biggest gain since Nov. 4. China Communications Construction Co. and China Railway Group Ltd. both surged by the daily limit. Data on Tuesday showed China’s economic growth missed analysts’ estimates last quarter, while industrial production, retail sales and fixed-asset investment all slowed at the end of the year.
Reorient Financial Markets Ltd. says government-led funds may have entered to bolster the market, which was a typical occurrence on large down days during last year’s $5 trillion rout and has been more sporadic amid the recent bear-market slump.
“The national team may be stepping in to boost confidence,” said Steve Wang, research director and economist at Reorient Financial in Hong Kong. “The latest GDP data barely moved the market as it’s only slightly lower than consensus estimates.”
China’s stocks have been volatile this week with trading volumes slumping after the benchmark index entered a bear market on Friday amid concerns about the government’s ability to manage its economy and financial markets. Tuesday’s data showed the economy is growing at two speeds, with old rust-belt industries from steel to coal and cement in decline while consumption, services and technology do better.
A gauge of industrial companies in the CSI 300 rose 4.7 percent, the most among the 10 industry groups. China Communications Construction jumped 10 percent, while China Railway Group also gained 10 percent.
China officially launched the $100-billion Asian Infrastructure Investment Bank on Saturday with an opening ceremony attended by President Xi Jinping. The bank will boost infrastructure investment in Asia and improve integration, he said.
Gross domestic product rose 6.8 percent in the fourth quarter, less than the forecast for 6.9 percent growth. For the full year, GDP increased 6.9 percent — the least since 1990 — in line with the government’s target of about 7 percent. Industrial production rose 5.9 percent in December, compared with the 6 percent estimate of analysts. Retail sales increased 11.1 percent, compared with the 11.3 percent forecast. Fixed-asset investment excluding rural areas expanded 10 percent last year, the weakest pace since 2000.
“The data pretty much came in as expected,” said Jackson Wong, associate director at Huarong International Securities Ltd. in Hong Kong. “I would love to see how they are going to stimulate the economy now. As of now we’ve seen most of the things that they could have done — infrastructure, RRR and interest-rate cuts and even depreciating the yuan. But we haven’t seen anything to make the economy significantly pick up.”
The policy response to last year’s slowdown included accelerated monetary easing with six interest-rate cuts since late 2014 and increased fiscal spending.
The Hang Seng China Enterprises Index rose 2.5 percent in Hong Kong, while the Hang Seng Index advanced 1.4 percent. Trading volumes in Shanghai were 9 percent below the 30-day average for this time of day.
Traders reduced holdings of shares purchased with borrowed money for a 12th straight day on Monday, cutting the outstanding balance of margin debt on the Shanghai stock exchange to 584 billion yuan ($88.8 billion), a four-month low.
China’s securities regulator denied a Reuters report that its Chairman Xiao Gang offered to resign. Reuters reported that the chairman of the China Securities Regulatory Commission submitted his resignation last week, citing unidentified people. It wasn’t clear whether the government had accepted his offer, the news agency said.