Shanghai Index Up 1.2% to 10-Day High

飞雪寒冰

China State Construction Engineering Corp. (SSE: 601668) and China Merchants Property Development Co. (SZSE: 000024) led a surge by property and construction firms on Oct. 14 that helped push the Shanghai Composite Index up 1.17 percent to a 10-day high of 2,970.53 points.

Investors drew confidence from encouraging earnings reports, pushing turnover in Shanghai to 144.8 billion yuan, compared with the five-day average of 92.8 billion yuan. Gainers led losers three to one.

The Shenzhen Component Index was up 0.85 percent to 11,975.91 points, with gainers outpacing losers five to two. Turnover was about 77.5 billion yuan, compared with the five-day average of 51.9 billion yuan.

China State Construction climbed by the 10 percent daily limit to 5.25 yuan, after the Beijing-based company said on Oct. 13 that real estate sales in the first nine months jumped 81.1 percent year-on-year to 37 billion yuan.

China Merchants Property gained 5.2 percent to 27.30 yuan, after it estimated third-quarter net profit growth of 200 percent year-on-year to about 513 million yuan due to higher sales.

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The growth rate reflected a low base of comparison and the success of the firm's marketing efforts, Guotai Junan Securities analyst Sun Jianping said.

"Strong growth in fixed asset investments in the first half have really begun to show up in developers' earnings," said Wangzhi Yong, a Hongyuan Securities analyst based in Beijing.

Wang also said the market "is beginning a strong rally and the Shanghai index could rise to the 3,300-point level." He added that third-quarter earnings might be the strongest quarterly earnings since the first quarter of 2007.  

Investors also backed brokers and insurers, which hold large equity portfolios, on expectations of gains in the coming days.

Changjiang Securities Co. (SZSE: 000783), which derived 21.2 percent of first-half profit from equity holdings, rose 2.56 percent to 18.42 yuan.

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Coal miners were among the biggest gainers, with China Coal Energy (SSE: 601898) up 2.42 percent to 12.68 yuan. The country's second-largest coal miner said on Oct. 14 that September domestic sales were up 14 percent month-on-month at 8.78 million metric tons.  

Also, coal prices have been rising in October, with inventories relatively low and demand building ahead of the winter heating season, wrote Datong Securities analyst Yu Hong in a Oct. 14 report.

China International Travel Service Corp. (SSE: 601888), the country's biggest travel agency, will debut in Shanghai on Oct. 15. The initial public offering aims to raise 259.16 million yuan with the share price set at 11.78 yuan.

Also, nine companies approved to list on the Nasdaq-style ChiNext will begin subscriptions on Oct. 15. The board is expected to launch in late October.