Strong Earnings, Rising Commodities Lift Shanghai Index

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Strong third-quarter earnings and rising oil and metals futures drove Chinese equities higher on Oct. 13, with the benchmark Shanghai Composite Index edging up 1.44 percent to 2,936.19 points.

Turnover in Shanghai was about 90.4 billion yuan, compared with the five-day average of 83.8 billion yuan. Gainers led losers five to two.

The Shenzhen Component Index was up 1.12 percent to 11,874.9 points, with gainers leading losers about 10 to two. Turnover was about 50.9 billion yuan, compared with the five-day average of 47.6 billion yuan.

Guangdong Baolihua (SZSE: 000690) surged 7.18 percent to 9.25 yuan, after the coal power company said net profit jumped 1,215.15 percent to 152 million yuan in the third quarter. The company cited capacity expansion, surging sales and equity investment gains.

Baolihua's earnings report sparked a rally in electricity providers and coal miners. Zhengzhou Coal Industry & Electric Power (SSE: 600121) climbed the 10 percent daily limit to 11.61 yuan.

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Jiaozuo Wanfang Aluminum Manufacturing Co. (SZSE: 000612) rose 6.47 percent to 21.05 yuan, after aluminum for December delivery rose 1.99 percent to US$1,947 per ton on the London Metal Exchange. The refiner said net profit might have risen 62 percent to 110 million yuan in the third quarter.

Shanghai Zi Jiang Enterprise Group Co. (SSE: 600210) gained 3.18 percent to 7.79 yuan, after reporting a better-than-expected 156.8 percent rise in third-quarter net profit from a year earlier to about 300 million yuan. The firm cited the strong performance of its packaging business and increasing real estate sales as major reasons for the increase. Also contributing was a one-time relocation fee of 50 million yuan paid by an unspecified local government when a subsidiary moved its headquarters.

Developers also strengthened, buoyed by China Vanke Co.'s (SZSE: 000002) announcement that September sales grew 27 percent to 5.5 billion yuan from the sale of 537,000 square meters of property. Vanke was 1.38 percent higher at 11 yuan.

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Top carmaker SAIC Motor Corp. (SSE: 600104) gained 2.62 percent to 21.16 yuan, after it estimated net profit might have grown more than 70 percent year-on-year in the first nine months, thanks to a 47 percent sales gain.

"Investors expect earnings in the fourth quarter to be as good as in the third, if not better, as they see the economy is well on track to a  recovery," said Zhang Zhuo, an analyst at Galaxy Securities Co. "That would provide the driving force for a steady rise in stocks, despite pressures from share sales, including initial public offerings."

But Datong Securities analyst Wang Zhihong was less optimistic. "The big money won't come in without seeing a clear recovery in corporate earnings and a decrease in fundraising activities," he said.