China's Stocks Rise, Capping Weekly Gain, on Policy Speculation

China’s stocks rose, capping a third week of gains for the benchmark index, on speculation the government will ease monetary policy and increase fiscal spending on infrastructure to bolster economic growth.

Rail car makers CSR Corp. (601766) and China CNR Corp. (601299) jumped more than 3 percent after the China Securities Journal reported railway spending may exceed government targets. Industrial & Commercial Bank of China Ltd. and Industrial Bank Co. led a gauge of financial companies to the highest level in seven weeks after the same newspaper reported that a cut in lenders’ reserve-requirement ratios may be the first option as the government loosens policy.

The Shanghai Composite Index (SHCOMP) gained 28.2 points, or 1.2 percent, to 2,406.86 at the close. The CSI 300 Index advanced 1.2 percent to 2,626.84. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. climbed 0.6 percent to a one-week high of 103.33 yesterday in New York.

The Shanghai index rose 2 percent this week, extending this year’s advance to 9.4 percent. Stocks in the gauge are valued at 10.2 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg. About 9.4 billion shares changed hands in the Shanghai Composite yesterday, 19 percent higher than the daily average this year. Thirty-day volatility in the gauge was at 18.9.