BEIJING: Chinese equities rose for the first time in three days, led by brokerages and energy companies, as investors sought companies that have underperformed the benchmark equity index amid a flood of new share sales.
A gauge of financial companies rallied 5.1 percent from its lowest level in six weeks as Huatai Securities Co. and Changjiang Securities Co. climbed by the 10 percent daily limit. PetroChina advanced 2.7 percent after tumbling almost 20 percent from its April high. The ChiNext index of smaller companies slid 0.6 percent from a record.
The Shanghai Composite Index rose 2.7 percent to 4,400.20 at 11:30 a.m., heading for its biggest gain since May 11 and the most among Asian benchmark stock measures. Twenty companies are scheduled to sell initial public offering shares from Tuesday to Thursday, which may freeze 2.8 trillion yuan ($451.1 billion).
“Investors that got allocations for new IPOs will hold, but those who didn’t get as much as they wanted will deploy excess funds to stocks that have underperformed,” said Gerry Alfonso, a trader at Shenwan Hongyuan Group Co. in Shanghai, the second-largest listed Chinese brokerage. “If an investor doesn’t want to take too much risk, they will park their funds into large caps and try again when there are new IPOs.”
The CSI 300 climbed 3.1 percent. Hong Kong’s Hang Seng China Enterprises Index rose 1.9 percent, while the Hang Seng Index gained 0.5 percent.
The Shanghai Composite has rallied 119 percent over the past year, sending valuations to 16.8 times projected 12-month projected, compared with the five-year average multiple of 10.2, according to data compiled by Bloomberg. Trading volumes in Shanghai were 38 percent below the 30-day average for this time of day.
