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Stocks edge up led by financial companies

(China Daily/agencies)
Updated: 2009-09-03 07:57

Chinese stocks gained for a second day, led by financial companies, as Premier Wen Jiabao eased concern that the government will tighten fiscal policy. Airline shares declined after fuel prices were hiked.

Industrial Bank Co surged 7.9 percent, the most in four months, and Poly Real Estate Group Co climbed 3.7 percent after Wen said China will maintain a moderately loose monetary policy. Air China Ltd, the nation's largest international carrier, dropped 3.1 percent after jet fuel prices went up by 6.3 percent.

"A loose monetary policy will ensure that the economic recovery is on the way, though maybe at a gradual pace," said Dai Ming, who manages the equivalent of about $14.6 million at Shanghai King Sun Asset Management Co. "The fuel price increase raises doubts about airline profits."

The Shanghai Composite Index rose 31.25, or 1.2 percent, to 2,714.97 yesterday. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, advanced 1.7 percent to 2,890.93.

Related readings:  China has world's third largest stock market  Stamp duty revenue on stock trading up 152.35% in July  Chinese shares edge up after day-earlier plunge  Shares fall over 6.74% on liquidity worries; heavyweights plunge

Concerns that a slowdown in loan growth will stifle economic growth dragged the benchmark gauge down 6.7 percent on Aug 31, the biggest loss in 14 months.

The economy is at a "critical phase" of its recovery and the government will stick to its pro-active fiscal policy, Premier Wen said, according to a Xinhua News Agency report. Wen spoke during a meeting with World Bank President Robert Zoellick on Tuesday, it said.

Recent stock market declines mean fewer new investors are putting cash into equities. Investors opened 449,267 accounts to trade stocks last week, 6.5 percent less than the preceding period, according to the China Securities Depository and Clearing Corp.