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Shanghai index climbs 1.2% despite decline in industrial profit
By Ye Zhen |
May 28, 2012, Monday
|
Online Edition
Online Edition
SHANGHAI stocks gained today as the central government resorted to stimulating policies to counteract the economic slowdown as weak data showed overall profit at industrial companies in China continued to fall in April.
The benchmark Shanghai Composite Index rose 1.2 percent, or 27.81 points to close at 2,361.37. Turnover was 86.7 billion yuan (US$13.8 billion) at the trading close.
Combined profit at industrial companies in China dropped 1.6 percent from a year earlier in the first four months this year, the National Statistics Bureau said yesterday. Industrial profits fell 2.2 percent annually in April to 407.6 billion yuan.
The central government introduced a flurry of stimulus in the past two weeks ranging from subsidy schemes to the acceleration of investment approvals, easing concern the country is heading for a hard landing.
"We don't believe that the policies can drag growth back to 9 percent, but policies can keep the economy growing at 8 percent," said Chen Li, a chief strategist with UBS Securities.
China's economy grew at 8.1 percent in the first quarter this year. The government set the 2012 growth target at 7.5 percent in March.
Government incentives contributed to a surge in construction related stocks. Cement producers led the market gains and the sector soared 7.1 percent. Anhui Conch Cement Co, the biggest Chinese cement producer, jumped 5.8 percent to finish at 17.87 yuan. Zhejiang Jianfeng Group Co gained the daily limit of 10 percent to 14.70 yuan.
Steel manufactures also advanced as steel prices rose on the government's move to spur demand. Changjiang & Jinggong Steel Building Group surged the daily limit to end at 8.46 yuan. Baoshan Iron and Steel Co added 1.7 percent to 4.88 yuan.
Property developers gained on speculation the government will loosen policies that curb real estate prices. China Vanke, the nation's biggest developer, grew 3.6 percent to 9.17 yuan. Poly Real Estate, the second largest player, rose 3.3 percent to 13.96 yuan.
The benchmark Shanghai Composite Index rose 1.2 percent, or 27.81 points to close at 2,361.37. Turnover was 86.7 billion yuan (US$13.8 billion) at the trading close.
Combined profit at industrial companies in China dropped 1.6 percent from a year earlier in the first four months this year, the National Statistics Bureau said yesterday. Industrial profits fell 2.2 percent annually in April to 407.6 billion yuan.
The central government introduced a flurry of stimulus in the past two weeks ranging from subsidy schemes to the acceleration of investment approvals, easing concern the country is heading for a hard landing.
"We don't believe that the policies can drag growth back to 9 percent, but policies can keep the economy growing at 8 percent," said Chen Li, a chief strategist with UBS Securities.
China's economy grew at 8.1 percent in the first quarter this year. The government set the 2012 growth target at 7.5 percent in March.
Government incentives contributed to a surge in construction related stocks. Cement producers led the market gains and the sector soared 7.1 percent. Anhui Conch Cement Co, the biggest Chinese cement producer, jumped 5.8 percent to finish at 17.87 yuan. Zhejiang Jianfeng Group Co gained the daily limit of 10 percent to 14.70 yuan.
Steel manufactures also advanced as steel prices rose on the government's move to spur demand. Changjiang & Jinggong Steel Building Group surged the daily limit to end at 8.46 yuan. Baoshan Iron and Steel Co added 1.7 percent to 4.88 yuan.
Property developers gained on speculation the government will loosen policies that curb real estate prices. China Vanke, the nation's biggest developer, grew 3.6 percent to 9.17 yuan. Poly Real Estate, the second largest player, rose 3.3 percent to 13.96 yuan.
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