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Shanghai’s Stocks Rise to Post Biggest Quarterly Gain Since 2009

China’s benchmark stock index capped its best quarterly performance since 2009 as coal producers rallied on the prospect that government reforms will support prices.

The Shanghai Composite Index (SHCOMP) rose 0.3 percent to 2,363.87 at the close. The benchmark index surged 15 percent this quarter on speculation reform measures will stem an economic slowdown and an exchange link with Hong Kong may fuel fund inflows.

The HSBC Purchasing Managers’ Index was at 50.2, lower than the preliminary figure of 50.5 and unchanged from August. Numbers above 50 signal expansion. A separate manufacturing index from the National Bureau of Statistics and China Federation of Logistics and Purchasing is scheduled to be published tomorrow.

Hong Kong’s Hang Seng China Enterprises Index (HSCEI) fell 1.2 percent, while the Hang Seng Index lost 1.3 percent. The CSI 300 Index gained 0.1 percent. The Bloomberg China-US Equity Index retreated 2.3 percent yesterday. Mainland markets will be shut from Oct. 1 to Oct. 7 for the National Day holidays.

The Shanghai Composite is valued at 8.6 times 12-month projected earnings, compared with the five-year average multiple of 10.9, according to data compiled by Bloomberg. Trading volumes in the index were 5.7 percent above the 30-day average.

Hong Kong’s biggest political unrest since the 1960s is wiping out the valuation premium of the city’s stocks over their Shanghai counterparts.

The Hang Seng China AH Premium Index, which measures the weighted average gap between the largest dual-listed shares, rose to 100.36, the highest level since policymakers unveiled the exchange link in April. A level of 100 means H-shares in Hong Kong trade at the same price as A-shares on the mainland.

The Hong Kong-Shanghai link will give foreign investors unprecedented access to mainland shares, allowing 13 billion yuan ($2.1 billion) of net buying per day.

Source: Bloomberg