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Stocks rise for 4th day as cyclical shares lead
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SHANGHAI stocks advanced for the fourth day in a row as investors discarded growth shares and chased cyclical shares on improving economic prospects.
The key Shanghai Composite Index added 0.15 percent to 2,241.27 points. Turnover was 195.4 billion yuan (US$32 billion) at the trading close, the highest in nearly three years.
Data released yesterday after the market close showed total social financing, the broadest measures of credit supply including loans, bank acceptance bills, corporate bonds and equity financing, totaled 1.57 trillion yuan in August, more than double the 750.4 billion yuan in July.
“The significant rebound in financing signaled warming investment willingness as business sentiment has improved on a brighter economic outlook,” analysts with China Merchants Securities said in a report.
The figure came on top of a slew of stronger-than-expected data including retail sales, industrial output and trade, suggesting an upturn in the world’s second largest economy after a long-term slowdown.
Cyclical shares, the performance of which closely tracks economic conditions, led the market up while growth shares slumped following their peers on the Shenzhen stock market.
ChiNext, a gauge of China’s Nasdaq-style board, plunged 3.4 percent, paring a gain of more than 70 percent this year.
“Prices of growth shares have been inflated and there will likely be a round of corrections as investors reallocate funds,” said Chen Li, analyst with UBS Investment Research.
China Shipbuilding Industry Co, a key supplier to the People’s Liberation Army, led the increase of shipbuilders, surging by the daily limit of 10 percent to 4.91 yuan, after announcing a plan to raise up to 8.48 billion yuan through a private placement.
Shanghai Waigaoqiao Free Trade Zone Development Co extended its winning streak to a ninth consecutive day, rising 10 percent to 31.85 yuan, as the official Shanghai Securities News reported China will release detailed plans for Shanghai’s pilot free trade zone as soon as this week.
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