Shares at 7-year high on spur hopes
Print Edition
SHANGHAI stocks rose to a seven-year high yesterday after another tepid reading on Chinese manufacturing activity that will likely raise hopes for fresh monetary easing.
The Shanghai Composite Index gained 1.87 percent to 4,529.42 points, the highest level since February 2008.
The index has surged 124 percent in the past 12 months amid speculation the government will extend interest-rate cuts and accelerate reforms of state-owned enterprises to bolster growth.
A preliminary reading of HSBC’s purchasing managers’ index for China showed activity picked up in May, but remained in contraction, despite Beijing’s efforts to kick-start the sluggish economy, including three interest rate cuts since November.
The flash PMI registered 49.1 this month, a two-month high but still below the 50 mark that separates contraction from growth. It was at 48.9 in April.
“The worse the data, the more speculation that more monetary stimulus will be coming,” said Wei Wei, an analyst at West China Securities Co, according to Bloomberg News.
Wang Tao, chief China economist at UBS Group, said: “Further policy support is still needed to stabilize China’s growth momentum and arrest the passive tightening of monetary conditions.”
China COSCO Holdings Co, the world’s largest operator of dry-bulk ships, and China Shipping Development Co, a unit of China’s second-biggest sea-cargo group, both rose by the 10 percent daily limit after the two firms said they plan to form a venture in Singapore, which will buy four ships from Vale SA for US$445 million.
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