2014.03.2405:17:58UTC+00Chinese Stocks Advance as Monetary, Coal Producers March Higher

Chinese stocks rallied higher, led by monetary and coal firms. Advances for equities were limited as a manufacturing index surprisingly sag down.

Bank of Beijing Co. bolstered 3.2 percent as a gauge of monetary firms boosted the second most among 10 industry groups in the CSI 300 Index. Poly Real Estate Group Co. soared 1.3 percent for a two-day hike of 8.2 percent. Yanzhou Coal Mining Co. recorded a 6.8 percent increase in Hong Kong trading after the firm reported an above projection profits and Credit Suisse Group AG upgraded the stock. China Petroleum & Chemical Corp. sank 1.5 percent after earnings had not reached analysts estimates

The Shanghai Composite Index inched up 0.1 percent 2,049.05 as of 9:49 a.m. The Hang Seng China Enterprises Index boosted 0.8 percent. The China Securities Regulatory Commission said after the market closed on March 21 that firms can issue preferred shares. A preliminary reading of a manufacturing index surprisingly pullback to 48.1 in March, according to data disseminated by HSBC Holdings Plc and Markit Economics today.

“The preferred-stock program is limited positive news,” said Wu Kan, a money manager at Dragon Life Insurance Co., which oversees about $3.3 billion. “Big-cap stocks may have some room to rebound on low valuations and the preferred-share plan. But given the weakness in the overall economy as evidenced by the manufacturing index, the market is still in a weak mode.”

The CSI 300 slide less than 0.1 percent to 2,158.24. The Bloomberg China-US Equity Index, the measure of the most-exchanged U.S.-listed Chinese firms, escalated 1.1 percent on March 21.

‘Old Economy’

The Shanghai index is valued at 7.5 times 12-month estimated profits, compared with the five-year average multiple of 12.1, according to information gathered by Bloomberg. It has relinquished 3.2 percent this year as analysts trim down their projections for 2014 economic development, the nation was damaged with its first onshore corporate bond default and an unlisted developer collapsed.

China International Capital Corp. advised buying shares of “old economy” industries which have “extremely low” valuations over “new economy” industries that have greater valuations and are heavily possessed by institutional investors, according to analysts Hanfeng Wang, Qiusuo Li and Yutong Hou.

CICC favors Chinese real estate, insurance, building material and steel firms as well as banks after the preferred-share plan was declared.

Firms can provide preferred shares if they are included in the Shanghai Stock Exchange 50 A-Share Index, the CSRC said in a statement on its microblog account. Publicly exchanged firms can also issue the stock to pay for acquisitions and purchase back shares, the regulator said.

Profits Outlook

The CSRC also said it will “appropriately” bring down monetary requirements on firms that targets for ChiNext listings to support innovative and growing companies.

Tangshan Port Group Co and .Beijing Dalong Weiye Real Estate Development Co. climbed 10 percent after the China Securities Journal reported the government may declare a free-trade zone plan for the capital city and its neighboring nations.

About 1,575 A-share firms have reported 2013 profits with an average earnings hike of 16.9 percent over the previous year, according to CICC.

Xinjiang Goldwind Science & Technology Co., the country’s second-largest maker of wind turbines, jumped 3.6 percent after earnings more than doubled and Premier Li Keqiang called for the progress of clean energy.