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Shanghai index rise on stronger developers
By Feng Jianmin |
June 14, 2011, Tuesday
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Online Edition
Online Edition
SHANGHAI'S key stock index rose the most in 10 days led by property developers on strong investment despite data revealed inflation in May was the fastest in 34 months.
The benchmark Shanghai Composite Index added 1.1 percent to 2,730.04 points. Turnover jumped to 96 billion yuan (US$14.8 billion) from Monday's 74 billion yuan.
China's top statistic bureau said today that consumer price index, a measure of inflation, 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 would raise requirement reserves ratio by another 0.5 percentage point next Monday. The measure is expected to control liquidity and would freeze 383.6 billion yuan from lending.
"The central bank raised reserve requirements instead of interest rates as it is balancing controlling inflation and 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 would continue a mild rebound."
But the company warned that growth will not be significant as inflation in June may hit 6 percent on rising food prices.
Property developers led the gainers after data showed that investment in the property sector rose 34.6 percent in the first five months from the same period last year. A measure for the prosperity of the sector rose for the fourth month to 103.2 points, slightly higher than last month's 103.19.
China Vanke, China's largest property developer, rose 3.4 percent to 8.17 yuan. Gemdale Corp jumped 7 percent to 6.19 yuan.
"We think investment in the property sector will remain strong in the next a few months," Wang Hui, an analyst with Haitong Securities said. "The construction of budget homes will speed up."
Cement makers rallied on speculation that demand will increase as more homes will be built. Anhui Conch Cement Co surged 9 percent to 38.25 yuan. Jiangxi Wannianqing Cement Co climbed by the daily limit of 10 percent to 15.02 yuan.
A report by China International Capital Corporation said that the average price for cement rose 0.5 percent last week, and the low valuation will support growth of the shares in the next three to six months.
The benchmark Shanghai Composite Index added 1.1 percent to 2,730.04 points. Turnover jumped to 96 billion yuan (US$14.8 billion) from Monday's 74 billion yuan.
China's top statistic bureau said today that consumer price index, a measure of inflation, 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 would raise requirement reserves ratio by another 0.5 percentage point next Monday. The measure is expected to control liquidity and would freeze 383.6 billion yuan from lending.
"The central bank raised reserve requirements instead of interest rates as it is balancing controlling inflation and 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 would continue a mild rebound."
But the company warned that growth will not be significant as inflation in June may hit 6 percent on rising food prices.
Property developers led the gainers after data showed that investment in the property sector rose 34.6 percent in the first five months from the same period last year. A measure for the prosperity of the sector rose for the fourth month to 103.2 points, slightly higher than last month's 103.19.
China Vanke, China's largest property developer, rose 3.4 percent to 8.17 yuan. Gemdale Corp jumped 7 percent to 6.19 yuan.
"We think investment in the property sector will remain strong in the next a few months," Wang Hui, an analyst with Haitong Securities said. "The construction of budget homes will speed up."
Cement makers rallied on speculation that demand will increase as more homes will be built. Anhui Conch Cement Co surged 9 percent to 38.25 yuan. Jiangxi Wannianqing Cement Co climbed by the daily limit of 10 percent to 15.02 yuan.
A report by China International Capital Corporation said that the average price for cement rose 0.5 percent last week, and the low valuation will support growth of the shares in the next three to six months.
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