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Shanghai shares up 1.9% on hopes for stimulus
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SHANGHAI stocks surged the most in more than two weeks on gains of financial and cyclical shares as investors are upbeat about stimulus measures.
The key Shanghai Composite Index rose 1.9 percent, or 39.45 points, to 2,098.28. Turnover was 108 billion yuan (US$17.7 billion).
The market advance came amid high expectations that the central government will boost infrastructure investment and slightly relax its monetary policy to ensure the world’s second largest economy to meet this year’s growth target of 7.5 percent.
“The stimulus package unveiled last week signaled that the government won’t allow the economy to expand at a rate slower than 7 percent. That boosted the market sentiment in the short term,” UBS Securities said in a note today.
HSBC Global Research said in a quarterly report that valuations of China’s equities have fallen to record low levels due to weak growth, and anticipation of policy adjustment to spur growth will help Chinese equities to rebound in the coming quarters.
“Inflation remains benign and the central bank’s effort to keep M2 money supply growth at 13% for 2014 should provide ample liquidity,” said the report.
“The government’s recent decision to open elder-care services, infrastructure and financial services to private capital should boost private investment in the coming quarters.”
Shares of coal and metal producers advanced. China Shenhua Energy Co Ltd gained 2.6 percent to 14.37 yuan. Shanxi Lu'an Environmental Energy Development Co Ltd rose 4 percent to 8.30 yuan. Shanxi Coal International Energy Group Co Ltd climbed 3.9 percent to 4.04 yuan.
Inner Mongolia Baotou Steel Rare-earth (Group) Hi-tech Co Ltd added 1.8 percent to 21.20 yuan. Xiamen Tungsten Co Ltd increased 3.8 percent to 26.56 yuan.
Financial shares also rose even though the central bank today drained 63 billion yuan from the banking system.
Industrial Bank Co Ltd surged 8 percent to 10.35 yuan. Shanghai Pudong Development Bank Co Ltd increased 4.2 percent to 10.14 yuan.
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