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Shanghai shares rise is highest since 2009
By Hu Xiaocen |
January 18, 2012, Wednesday
|
Print Edition
Print Edition
SHANGHAI stocks rose by the biggest jump since October 2009 yesterday as slowing economic growth boosted expectations for monetary easing and speculation grew that the government will support equities.
The Shanghai Composite Index advanced 92.18, or 4.2 percent, to 2,298.38.
More than 100 gainers rose to touch the 10 percent daily trading cap, while all sectors gained.
Statistics showed yesterday that China's economy grew 8.9 percent in the last quarter of 2011. It was the slowest since mid-2009 and an indication of China's weaker economic momentum amid dwindling exports and a gloomy property market.
Economists widely expect authorities to gently ease monetary policy to bolster the economy.
"We expect 200 basis points, or 2 percentage points, in required reserve ratio cuts in the first three quarters of this year, following recent easing, with the next one in January," said Dariusz Kowalczyk, senior economist at Credit Agricole.
Stephen Green, of Standard Chartered, said more reserve requirement cuts could be under way, though not immediately.
Although an expected reserve requirement cut hasn't yet materialized, the People's Bank of China did engage in a transaction with banks to provide liquidity before the holiday.
And there were reports of at least two other liquidity-providing actions by the central bank.
A report that China's National Social Security Fund had won approval to invest 100 billion yuan (US$15.8 billion) from local pensions in stocks and bonds also acted as a shot in the arm for the market.
China's securities regulator said last week it would "actively" push pension and housing funds to begin investing in the capital market, and encourage long-term investors such as insurers and corporate pension plans to buy more shares.
Shanghai Mayor Han Zheng's comment that it was not the right time to launch an international board also helped calm the market.
Brokers jumped an average 6.8 percent yesterday.
Industrial Securities gained 8.33 percent to 10.53 yuan, CITIC Securities added 6.92 percent to 10.51 yuan, and Haitong Securities rose 6.68 percent to 8.15 yuan.
The Shanghai Composite Index advanced 92.18, or 4.2 percent, to 2,298.38.
More than 100 gainers rose to touch the 10 percent daily trading cap, while all sectors gained.
Statistics showed yesterday that China's economy grew 8.9 percent in the last quarter of 2011. It was the slowest since mid-2009 and an indication of China's weaker economic momentum amid dwindling exports and a gloomy property market.
Economists widely expect authorities to gently ease monetary policy to bolster the economy.
"We expect 200 basis points, or 2 percentage points, in required reserve ratio cuts in the first three quarters of this year, following recent easing, with the next one in January," said Dariusz Kowalczyk, senior economist at Credit Agricole.
Stephen Green, of Standard Chartered, said more reserve requirement cuts could be under way, though not immediately.
Although an expected reserve requirement cut hasn't yet materialized, the People's Bank of China did engage in a transaction with banks to provide liquidity before the holiday.
And there were reports of at least two other liquidity-providing actions by the central bank.
A report that China's National Social Security Fund had won approval to invest 100 billion yuan (US$15.8 billion) from local pensions in stocks and bonds also acted as a shot in the arm for the market.
China's securities regulator said last week it would "actively" push pension and housing funds to begin investing in the capital market, and encourage long-term investors such as insurers and corporate pension plans to buy more shares.
Shanghai Mayor Han Zheng's comment that it was not the right time to launch an international board also helped calm the market.
Brokers jumped an average 6.8 percent yesterday.
Industrial Securities gained 8.33 percent to 10.53 yuan, CITIC Securities added 6.92 percent to 10.51 yuan, and Haitong Securities rose 6.68 percent to 8.15 yuan.
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