China stocks rise to 13-month high, as China Life’s earnings forecast brightens outlook

China’s stocks rose on Friday, with the benchmark reaching a 13-month high, as a profit forecast from bellwether China Life Insurance spurred optimism that corporate earnings growth will pick up.

The Shanghai Composite Index closed 0.6 per cent higher, reflecting its highest level since March 21, 2018 and capped a weekly gain of 2.6 per cent. The CSI 300 Index of big-caps gained 1.2 per cent. Hong Kong’s market was shut for an extended holiday and will reopen on Tuesday.

With China reporting growth that beat estimates this week, traders will go through earnings reports in the coming week to assess how business at publicly traded companies fared in the first three months of the year. A resilient forecast from China Life seemed to signal that a pickup in growth at the world’s second-largest economy may be filtering through to earnings.

“There are less worries about the macroeconomy now and the government still has policies in reserve, such as boosting consumption to further bolster growth,” said Ken Chen, a strategist at KGI Securities in Shanghai. “We’ll see an improvement in first-quarter earnings on a quarter-on-quarter basis and the second-quarter may improve year-on-year.”

China Life, which is among the top 10 weighted stocks on the Shanghai Composite, added 4.3 per cent to 31.38 yuan after the insurer said it expected first-quarter profit to have risen by as much as 100 per cent. A rebound in stocks and rising bond yields boosted its investment returns, China Life said in an exchange statement on Friday.

Gree Electric Appliances, China’s biggest manufacturer of air conditioners, surged 9.2 per cent to a record 65 yuan. Huatai Securities predicts the stock will rise 25 per cent to 80.96 yuan as the company is likely to sweeten dividend payouts and benefit from accumulation by foreign investors.