Index rises on inflation data
By Feng Jianmin |
June 15, 2011, Wednesday
|
Print Edition
Print Edition
SHANGHAI'S key stock index yesterday rose the most in two weeks as May's inflation was lower than market expectations, easing fears of interest rate increases.
The benchmark Shanghai Composite Index added 1.1 percent to 2,730.04 points, the biggest advance since May 31.
China's statistics bureau yesterday said the Consumer Price Index rose 5.5 percent in May from a year earlier. The figure was the highest in 34 months, but was slightly lower than market expectations of 5.6 percent.
The central bank announced after the market closed yesterday that it will raise the reserve requirement ratio by another 0.5 percent on Monday. The move will freeze about 384 billion yuan (US$59 billion) from being lent by banks.
"The central bank raised the reserve requirement ratio instead of interest rates as it is trying to control inflation while maintaining economic growth," Morgan Stanley Huaxin Funds wrote in a note to its clients.
"The measure is weaker than market expectations, and thus the market will continue its mild rebound."
But the note warned growth will be small as inflation in June may hit 6 percent due to rising food prices.
Property developers led yesterday's gains after data showed China's May home sales transaction value rose 17 percent from April as developers marketed more residential projects during the May Day holiday even as the government maintained its housing curbs.
Poly Real Estate Group Co, China's second-largest listed developer, jumped 6.8 percent to 10.18 yuan. Gemdale Corp, the fourth-biggest, jumped 7 percent to 6.19 yuan.
The benchmark Shanghai Composite Index added 1.1 percent to 2,730.04 points, the biggest advance since May 31.
China's statistics bureau yesterday said the Consumer Price Index rose 5.5 percent in May from a year earlier. The figure was the highest in 34 months, but was slightly lower than market expectations of 5.6 percent.
The central bank announced after the market closed yesterday that it will raise the reserve requirement ratio by another 0.5 percent on Monday. The move will freeze about 384 billion yuan (US$59 billion) from being lent by banks.
"The central bank raised the reserve requirement ratio instead of interest rates as it is trying to control inflation while maintaining economic growth," Morgan Stanley Huaxin Funds wrote in a note to its clients.
"The measure is weaker than market expectations, and thus the market will continue its mild rebound."
But the note warned growth will be small as inflation in June may hit 6 percent due to rising food prices.
Property developers led yesterday's gains after data showed China's May home sales transaction value rose 17 percent from April as developers marketed more residential projects during the May Day holiday even as the government maintained its housing curbs.
Poly Real Estate Group Co, China's second-largest listed developer, jumped 6.8 percent to 10.18 yuan. Gemdale Corp, the fourth-biggest, jumped 7 percent to 6.19 yuan.
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