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Stocks up on EU debt deal, monetary easing
By Lydia Chen |
October 27, 2011, Thursday
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Online Edition
Online Edition
SHARES in Shanghai rose for a fourth straight day today on speculation that China may start monetary easing while EU leaders also reached a deal on battling the euro debt crisis.
The Shanghai Composite Index added 0.34 percent to 2,435.61. Turnover fell to 75.1 billion yuan (US$11.83 billion) from yesterday's 98.6 billion yuan.
Shanghai-based transportation and service firms were among the strongest performers today after China announced late yesterday it would start lowering corporate taxes in selected service industries next year. The trial scheme will focus on Shanghai as the government acts to support companies saddled by rising costs and slowing growth.
Dazhong Transportation Group Co jumped by the daily limit of 10 percent to 6.44 yuan. Shanghai Jiabao Industry & Commerce Co also posted a nearly 10 percent rise to 5.97 yuan.
Transportation and some service companies in Shanghai will have their businesses taxes replaced by a value-added tax, the majority of which will be deductible, starting on January 1, the State Council, or Cabinet, said in a statement.
Gains among banks, the biggest sector on the Shanghai market, reinforced the market rise thanks to strong earning reports released by lenders and expectations that China may lower the bank reserve requirement ratio soon.
Agriculture Bank of China jumped 1.13 percent to 2.68 yuan after it said third quarter net profit hiked to 34.1 billion yuan from 24.3 billion yuan a year ago. Industrial & Commercial Bank of China added 0.94 percent to 4.30 yuan.
China's central bank will suspend sales of three-year bank notes tomorrow; a move analysts said indicated the country may apply easing policies in certain economic areas.
China may lower the reserve requirement ratio for small- and medium-sized banks in November and extend the cutback to all banks if housing prices start heading downwards and inflation falls to 4 percent, said Shen Jianguang, chief economist of Mizuho Financial Group.
Goldman Sachs said in a report this week that it expected the CSI 300, a capitalization-weighted stock market index designed to replicate the performance of 300 stocks traded on the Shanghai and Shenzhen stock exchanges, to rebound to 3,200 points from the 2,657.48 today.
The investment bank said market's concern of a hard landing for the Chinese economy was unnecessary as it expected an 8.6 percent year-on-year rise in the country's gross domestic product next year.
The Chinese government is not likely to further its tightening and may allocate more liquidity to support its economy when inflation drops to 3 percent in the second quarter next year.
The Shanghai Composite Index added 0.34 percent to 2,435.61. Turnover fell to 75.1 billion yuan (US$11.83 billion) from yesterday's 98.6 billion yuan.
Shanghai-based transportation and service firms were among the strongest performers today after China announced late yesterday it would start lowering corporate taxes in selected service industries next year. The trial scheme will focus on Shanghai as the government acts to support companies saddled by rising costs and slowing growth.
Dazhong Transportation Group Co jumped by the daily limit of 10 percent to 6.44 yuan. Shanghai Jiabao Industry & Commerce Co also posted a nearly 10 percent rise to 5.97 yuan.
Transportation and some service companies in Shanghai will have their businesses taxes replaced by a value-added tax, the majority of which will be deductible, starting on January 1, the State Council, or Cabinet, said in a statement.
Gains among banks, the biggest sector on the Shanghai market, reinforced the market rise thanks to strong earning reports released by lenders and expectations that China may lower the bank reserve requirement ratio soon.
Agriculture Bank of China jumped 1.13 percent to 2.68 yuan after it said third quarter net profit hiked to 34.1 billion yuan from 24.3 billion yuan a year ago. Industrial & Commercial Bank of China added 0.94 percent to 4.30 yuan.
China's central bank will suspend sales of three-year bank notes tomorrow; a move analysts said indicated the country may apply easing policies in certain economic areas.
China may lower the reserve requirement ratio for small- and medium-sized banks in November and extend the cutback to all banks if housing prices start heading downwards and inflation falls to 4 percent, said Shen Jianguang, chief economist of Mizuho Financial Group.
Goldman Sachs said in a report this week that it expected the CSI 300, a capitalization-weighted stock market index designed to replicate the performance of 300 stocks traded on the Shanghai and Shenzhen stock exchanges, to rebound to 3,200 points from the 2,657.48 today.
The investment bank said market's concern of a hard landing for the Chinese economy was unnecessary as it expected an 8.6 percent year-on-year rise in the country's gross domestic product next year.
The Chinese government is not likely to further its tightening and may allocate more liquidity to support its economy when inflation drops to 3 percent in the second quarter next year.
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