An outlet of Beijing Tongrentang Co at Beijing Capital International Airport. Shares of the retailer of traditional Chinese medicines, jumped 10 percent on Friday after the Shanghai Securities News said the government may announce a biomedical development plan by the end of the month. [Photo / China Daily]

Mooted unveiling of biomedical plan gives stocks a shot in the arm

SHANGHAI - Stocks on the Chinese mainland rose on Friday, capping a fourth weekly gain. The advance came as drugmakers rallied on the prospect of increased investment in the industry and the nation's biggest cement producer estimated a three-fold jump in profit.

Beijing Tongrentang Co, a retailer of Chinese medicine, jumped 10 percent after the Shanghai Securities News said the government may announce a biomedical development plan by the end of the month. Anhui Conch Cement Co climbed to its highest price since 2007 after saying first-half profit surged 200 percent. Poly Real Estate Group Co led declines for property developers after the Chinese authorities said smaller cities with excessive price gains should restrict the number of homes each family can buy.

"The property curbs have reinforced worries about a slowdown in economic growth," said Li Jun, a strategist at Central China Securities Co in Shanghai. "Defensive stocks such as consumer and pharmaceutical companies with solid growth prospects are good havens amid a backdrop of economic uncertainty."

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, rose 9.73 points, to 2820.17 at its close, the highest since May 20. The CSI 300 Index gained 0.4 percent to 3128.89.

The Shanghai gauge climbed 0.8 percent this week after government reports showed that China's economy grew at a faster-than-expected 9.5 percent in the second quarter and industrial production rose more than estimated in June. The gauge has added 0.4 percent this year. Foreign direct investment in China gained 18.4 percent in the first half of the year, the Ministry of Commerce said in a report on Friday.

Annual growth in drug sales may reach about 23 percent by 2015 and the medical industry's total output value may be about 1.25 trillion yuan ($193.4 billion) this year, the Shanghai Securities News reported.

A gauge of 21 health-care stocks jumped 3.6 percent on Friday, the most among the CSI 300's 10 industry groups. Beijing Tongrentang surged by the maximum daily limit of 10 percent to 18.29 yuan. Yunnan Baiyao Group Co, a manufacturer of traditional Chinese medicines, rose 3.3 percent to 62.30 yuan. Guangzhou Pharmaceutical Co gained 3.1 percent to 17.27 yuan.

Anhui Conch advanced 0.5 percent to 28.72 yuan, its highest close since October 2007. First-half net income may have increased 200 percent from a year earlier as the selling price of its products rose "significantly," the cement maker said in a statement on Thursday.

The company's shares have soared 158 percent over the past year, spurred by the government's plans to build more affordable housing to limit gains in property prices and avert a bubble. Samsung Securities kept its "buy" rating on the stock, saying Anhui Conch should be able to maintain high margins.

Huaxin Cement Co, the Chinese affiliate of Holcim Ltd, climbed 0.5 percent to 29 yuan. Gansu Qilianshan Cement Group Co gained 1.4 percent to 18.98 yuan.

A measure tracking 34 property stocks on the Shanghai Composite slid 1.2 percent on Friday, the only decliner among five industry groups. Poly Real Estate, the nation's second-largest property developer, slid 2.8 percent to 10.60 yuan. China Vanke Co, the biggest, fell 1.8 percent to 8.43 yuan. China Merchants Property Development Co. lost 3.4 percent to 17.90 yuan.

China is intensifying property restrictions nationwide after developers posted gains in first-half sales and housing transactions climbed 31 percent last month, even after more curbs were added earlier this year. The central bank announced on July 6 that it was raising interest rates for the fifth time since October.

China will also curb gains in housing rents, a report from the State Council said. The government will ensure the construction of 10 million units of social or affordable housing begins by the end of November, according to the report.

June home prices climbed 0.4 percent from May, rising for a 10th month, according to SouFun Holdings Ltd, the biggest real estate website. The increase was driven by smaller cities, while prices in larger ones, including Beijing and Shanghai, either posted slower gains or declines from May, it said.

The chairman of the US Federal Reserve Ben Bernanke testified for a second day before lawmakers after saying a day earlier he's prepared to provide more stimulus if needed. Bernanke said on Thursday that inflation now is "higher" and "closer" to the central bank's informal target than was the case in August and that's one reason why the Fed won't immediately embark on a third round of bond-buying.

The US may have its AAA long-term and A-1+ short-term credit ratings cut by Standard & Poor's Ratings Services (S&P), which said there is an increasing risk of a substantial policy stalemate enduring beyond any near-term agreement to raise the debt ceiling. S&P put the ratings on Creditwatch negative, meaning there's a one-in-two chance they may be cut in the next 90 days.

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