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August 13, 2016

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Speculation of property merger lifts shares

SHANGHAI shares rallied to close higher yesterday on speculation of a merger in the property market as investors shrugged off economic data that suggest a still weak Chinese economy.

The Shanghai Composite Index rose 1.6 percent to end at 3,050.67 points. The gauge gained 2.49 percent for the week.

Langfang Development Co, a target of billionaire Xu Jiayin’s China Evergrande Group, jumped by the daily 10 percent limit to 26.91 yuan (US$179) on rising speculation that a merger might take place between them.

Evergrande, which boosted its stake in Langfang to 15 percent in the past four months, plans to further increase its holding and there is a possibility that it may obtain actual control of the firm, Langfang said in its filing to the Shanghai Stock Exchange on Wednesday.

Other real estate stocks rose, with Poly Real Estate Group Co climbing 7.7 percent to 9.93 yuan and Gemdale Corp surging by the 10 percent daily limit.

Investor sentiment was not swayed by several economic data released yesterday which showed the growth rate of industrial production and fixed asset investment was lower than expected.

China’s industrial production expanded 6 percent annually last month, below the growth of 6.2 percent in June, the National Bureau of Statistics said yesterday. Fixed asset investment for January to July rose 8.1 percent but it was the slowest growth since 1999.


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