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By Bloomberg

China’s stocks jumped the most in 15 months, sending the benchmark index to a three-year high, as a surge in trading boosted the outlook for brokerage profits and investors bet the central bank will ease monetary policy.

Haitong Securities Co., China Minsheng Banking Corp. and China Life Insurance Co. jumped more than 8 percent in Shanghai. Ping An Insurance (Group) Co. gained 6.1 percent in Hong Kong after people with knowledge of the matter said Alibaba Group Holding Ltd. founder Jack Ma agreed to invest in the company. Money-market rates fell as the People’s Bank of China refrained from draining funds from the financial system.

The Shanghai Composite Index advanced 3.1 percent to 2,763.55 at the close. Hong Kong’s Hang Seng China Enterprises Index rebounded from the steepest plunge in nine months, adding 2.8 percent. Data yesterday showing slower-than-forecast growth in manufacturing increased speculation the central bank will follow up on last month’s cut in interest rates with a reduction in lenders’ reserve-requirement ratios.

“It looks like the market has reached consensus that it’s a bull market and fresh capital is flowing in,” Dai Ming, a fund manager at Hengsheng Asset Management Co. in Shanghai, said by phone today. “Brokerages are the biggest beneficiaries because of surging trading values. The possible window for a reserve-requirement ratio cut could be the end of the year or early next year.”

Financials Jump

The Shanghai index has advanced 31 percent this year, heading for the biggest annual gain since 2009, amid optimism lower borrowing costs will boost consumer spending. The measure plunged 35 percent from the start of 2010 through the end of last year. Trading volumes were 65 percent above the 30-day average today, according to data compiled by Bloomberg.

The CSI 300 Index rallied 3.7 percent. The Hang Seng Index climbed 1.2 percent on signs pro-democracy demonstrations as fizzling amid fading public support and disagreements within the movement over tactics.

A gauge of financial shares in the CSI 300 surged 6.7 percent, the most among 10 industry groups. Citic Securities Co. climbed 7.3 percent. Ping An Bank added 7.6 percent. Minsheng jumped 10 percent after the lender said Anbang Insurance Group and its units had taken a 5 percent stake.

Guoyuan Securities Co. and Founder Securities Co. soared 10 percent. Trading values in the Shanghai Composite rose to a record 401.6 billion yuan ($65.3 billion) last week, boosting the profit outlook of brokerages relying on trading commissions as the main source of revenue.

Rate Outlook

Expectations are high that the PBOC will follow the Nov. 21 cut in interest rates with a reduction in the reserve ratio, Bloomberg economist Tom Orlik said. Economic growth continues to weaken, money-market rates remain high and reserve-ratio cuts are complimentary to rate reductions, he said. Investors should buy financial stocks amid prospects the central bank will cut requirement ratios twice next year, Chen Li, China strategist at UBS Group AG, said in an interview yesterday.

Reserve ratios have remained unchanged at 20 percent for major banks and 18 percent for smaller banks since May 2012.

The PBOC didn’t offer repurchase or reverse-repurchase agreements today, according to traders at primary dealers required to bid at the auctions. The central bank halted sales of repos used to withdraw funds on Nov. 27 for the first time in four months, after conducting the operations every Tuesday and Thursday. The six companies trading tomorrow include Shenzhen Center Power Tech. Co. and V-Grass Fashion Co.

PetroChina Rally

An estimated 400 billion yuan may flow from China’s property market next year into the A-share market, Kinger Lau, chief China strategist with Goldman Sachs Group Inc., said at a briefing in Beijing yesterday. The CSI 300 may rise 10 percent by the end of next year, he said.

An annual economic meeting of China’s Communist Party leaders is likely to set lower 2015 targets for growth and inflation, Song Yu, China economist at Goldman Sachs, said at the same briefing. The GDP target may be 7 percent for 2015, down from 7.5 percent this year, Song said. The China Central Economic Work Meeting will start on Dec. 9, Ta Kung Pao reported last month.

In Hong Kong trading, PetroChina Co. gained 1.9 percent, halting a five-day slide as oil prices jumped yesterday.

Pro-democracy protesters in the city face a new court ruling to clear out after an earlier attempt to expand their hold on a swathe of central Hong Kong was beaten back by police. The court yesterday granted an injunction to All China Express, a bus company, for the removal of barricades on parts of the roads protesters have occupied in the Admiralty district for more than two months.