By Bloomberg News Dec. 28 (Bloomberg) -- China’s stocks rose to the highest in almost two weeks after profits at industrial companies increased for the first time in a year and the government raised price caps for rural purchases of home appliances. China Petroleum & Chemical Corp., Asia’s biggest oil refiner, also known as Sinopec, gained the most in two weeks. China Shenhua Energy Co., the nation’s largest coal producer, added 2.4 percent. GD Midea Holding Co., China’s second-biggest publicly traded appliance maker, climbed to a 19-month high, while Hisense Electric Co., a manufacturer of flat-panel televisions, surged to a record. “The economic recovery is still well under way and corporate earnings are improving,” said Larry Wan, the Shanghai-based deputy chief investment officer at KBC-Goldstate Fund Management Co., which oversees about $583 million. “There’s no reason to be bearish on equities.” The Shanghai Composite Index rose 52.34, or 1.7 percent, to 3,193.70 as of the 11:30 a.m. local-time break, the highest since Dec. 16. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, gained 1.8 percent to 3,484.68. The Shanghai gauge rallied 75 percent this year as government spending and a credit boom helped the nation’s economy recover from its steepest slump in more than a decade. Sinopec added 2.6 percent to 13.65 yuan, the most since Dec. 14. Shenhua rose 2.4 percent to 33.57 yuan. Baoshan Iron & Steel Co., China’s biggest steelmaker, advanced 3.1 percent to 9.20 yuan. Industrial Profits Net income for Chinese industrial companies grew 7.8 percent in the January to November period to 2.59 trillion yuan ($379 billion) from a year earlier, the statistics bureau said today. Profits dropped 10.6 percent in the first eight months of the year. Premier Wen Jiabao said yesterday that the government was wary of derailing the recovery by withdrawing stimulus measures too early. China raised its 2008 growth estimate to 9.6 percent from 9 percent and said this year’s quarterly figures will increase, according to the statistics bureau. The nation’s stock market has “little risk, much opportunity” in 2010 as corporate profits expand and liquidity remains ample, according to the China Securities Journal. China’s nominal gross domestic product growth may reach 13 percent next year, corporate profits may increase 25 percent and bank lending will be at least 8 trillion yuan, the newspaper said in a front-page editorial. Inflation may top 3 percent in the first quarter, prompting investors to shift more savings into equities, the report said. Midea, Hisense Midea rose 1.5 percent to 23.01 yuan, the highest since May 2008. Hisense gained 2.4 percent to 26 yuan. Suning Appliance Co., China’s biggest home appliance retailer by market value, added 1.3 percent to 19.93 yuan. Price caps for mobile phones and televisions doubled and levels for seven other types of home appliances, including refrigerators and washing machines, increased by between 25 percent and 75 percent, Vice Finance Minister Zhang Shaochun said in an online chat with the public on the government’s Web site on Dec. 25. He didn’t specify when the changes take effect. “Consumer stocks are good bets as they will receive most of the government support next year,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names. China Life Insurance Co. (601628 CH), the nation’s biggest insurer, rose 2.9 percent to 30.68 yuan. China Life agreed to buy 934 million new shares in Sino-Ocean Land Holdings Ltd. at HK$6.23 each, taking a 16.6 percent stake in the company, Sino- Ocean said in a statement. Gezhouba Co. (600068 CH), a water conservancy project contractor, rose 1.3 percent to 11.59 yuan after saying it expects full-year net income to rise 60 percent. --Zhang Shidong. Editor: Linus Chua, Nick Gentle To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-7014 or szhang5@bloomberg.net

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