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Policy support hopes lift stocks

(China Daily/agencies)
Updated: 2009-09-04 07:58

Chinese stocks rose for a third day, driving the Shanghai Composite Index to its biggest gain in six months, on speculation regulators will adopt measures to boost the nation's equities following declines in the past month.

CITIC Securities Co, the country's largest brokerage, jumped 6.6 percent and Poly Real Estate Group Co surged 8.2 percent after newspapers highlighted comments by Liu Xinhua, vice chairman of the China Securities Regulatory Commission, that regulators will promote a "stable and healthy" market.

The benchmark index climbed 130.05, or 4.8 percent, to 2,845.02 at the close, the most since March 4. The three-day gain almost erased a 6.7 plunge on Aug 31. The gauge tumbled 22 percent last month on concern slowing loan growth will stifle economic expansion. The CSI 300 Index, measuring Shanghai and Shenzhen exchanges, rose 5.6 percent to 3,051.96.

"The regulator's comment has prompted speculation the government may take steps to support the market," said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co, which manages about $285 million.

Related readings:  Chinese shares surge 4.8% on regulator assurance  Chinese stocks gain 1.16%, driven by banking shares  Shares on rebound, despite dip in Aug  Shares fall over 6.74% on liquidity worries; heavyweights plunge

The Shanghai stock index slumped the most since October last month as banks reined in lending to avert asset bubbles and policy makers advised industries such as steel and cement to curb overcapacity.

Zijin Mining, the biggest gold producer, surged 9.2 percent to 8.79 yuan. Zhongjin Gold, the No 2, climbed the 10 percent daily limit to 52.31 yuan. Gold futures for December delivery rose 2.3 percent yesterday in New York, the most since March 19. Gold for immediate delivery rose 2.4 percent in late trade.

SAIC Motor Co, the Chinese partner of General Motors Co, gained 6.7 percent to 18.55 yuan after GM said full-year sales in China may rise more than 40 percent as tax cuts and stimulus measures helped double demand in August.

Hang Seng advances

Hong Kong stocks rose as Aluminum Corp of China Ltd led gains after Alcoa Inc lifted its forecast for global aluminum consumption, and on optimism that the city's economy may stage a full recovery by mid-2010.

Aluminum Corp, known as Chalco, climbed 4.4 percent. Wharf (Holdings) Ltd, owner of two of Hong Kong's biggest malls, rose 2.8 percent. The city's exports and economy may "fully recover" by the middle of next year according to Hong Kong Trade Development Council's chief economist.

The Hang Seng Index rose 1.2 percent to 19,761.68 at the close. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese companies, added 2.1 percent to 11,429.21.

"The Chinese economy has stabilized, it's gone for a period of recovery," said Michael Liang, chief investment officer at Foundation Asset Management (HK) Ltd, which manages $80 million. "The picture is more positive than negative. I'm not too worried."