China’s commodity stocks rose, driving the Shanghai Composite Index (SHCOMP) to the highest level in nine months, after growth in the nation’s service industries accelerated. China Shenhua Energy Co. (601088) and Yanzhou Coal Mining Co. led a gauge of energy stocks to the biggest gain among the the CSI 300 (SHSZ300) Index’s 10 industry groups. Sany Heavy Industry Co., the biggest Chinese machinery maker, surged 5.2 percent. ZTE Corp., the nation’s second-biggest phone-equipment maker, sank 5.9 percent, leading the Shenzhen Composite Index to its biggest drop in more than a week. Almost two stocks declined for each that rose in the Shanghai Composite Index, which gained 0.1 percent to 2,422.04 as of 1:27 p.m. local time. The measure advanced 5.6 percent last week, the most since Oct. 28, 2011, after data showed the nation’s manufacturing expanded last month. China’s service industries grew at the fastest pace since August, a government report showed yesterday. “The stock market is enjoying a valuation expansion and improving data are providing support,� said Li Jun, a strategist at Central China Securities Co. in Shanghai. The Shanghai index was poised for the highest close since May 8. The gauge has risen 24 percent from a three-year low on Dec. 3, signaling a bull market to some investors, on signs economic growth is accelerating. The index is valued at 13.3 times reported profit, the highest level since Sept. 2011, data compiled by Bloomberg show. That’s still lower than the measure’s seven-year average multiple of 21.4, the data show. Trading Volumes The CSI 300 lost 0.1 percent to 2,740.13 today, while the Shenzhen Composite, a gauge of stocks listed in the southern Chinese city, slid 1 percent. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong gained 0.1 percent. Mainland markets will be closed next week for the Lunar New Year holidays. Trading volumes in the Shanghai Composite were 55 percent higher than the 30-day average today, according to data compiled by Bloomberg. Thirty-day volatility in the gauge was at 17.8, compared with the average of 16.9 over the past year. A measure of energy stocks rose 3.1 percent. Shenhua, the biggest coal producer, added 2 percent to 25.10 yuan. China Coal Energy Co. (601898), the second largest, gained 4.5 percent to 8.44 yuan. Datong Coal Industry Co. surged 8.3 percent to 10.10 yuan. China’s services industries rose as gains in retailing and construction aided government efforts to drive a recovery. The non-manufacturing Purchasing Managers’ Index climbed to 56.2 in January from 56.1 in December, the National Bureau of Statistics and China Federation of Logistics & Purchasing said in a statement. A reading above 50 indicates expansion. Sany, ZTE The federation’s manufacturing PMI released Feb. 1 showed a fourth month of expansion and a separate gauge from HSBC Holdings Plc and Markit Economics rose to the highest level in two years. The statistics bureau and the customs office are due to release January data on inflation and exports on Feb. 8. Sany Heavy surged 5.2 percent to 12.62 yuan, poised for the highest close since July 13. Zoomlion Heavy Industry Science and Technology Co., China’s second-biggest maker of construction equipment, climbed 1.8 percent to 9.88 yuan. Construction-machinery equipment sales will peak after the Chinese new year, KGI Securities wrote in a report dated Jan. 31. Excavator sales may post year-on-year growth as sector fundamentals are continuing to improve, KGI said. ZTE tumbled 5.9 percent to 10.26 yuan, heading for its biggest drop since Oct. 15. Mobile phones including smartphones will be investigated under a tariff act, the U.S. International Trade Commission announced on Jan. 31. Chinese stocks traded in the U.S. rose on Feb. 1 after data showed the U.S. added jobs in January and manufacturing expanded. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, added 0.8 percent in New York. The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., advanced 0.8 percent. --Zhang Shidong. Editors: Allen Wan, Darren Boey To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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