Five-Year Plan aids rise in shares

By Chua Kong Ho (China Daily)
Updated: 2010-10-20 14:32
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SHANGHAI - Mainland stocks gained, driving the benchmark index above the 3,000 level for the first time since April, as technology and consumer companies rose on speculation that the industries will gain from the country's next Five-Year Plan.

Tsinghua Tongfang Co, a computer manufacturer, jumped by the 10 percent daily limit and Sanan Optoelectronics Co gained 4.7 percent after the government said information technology will form a bigger part of the economy. Gree Electric Appliances Inc and SAIC Motor Corp paced gains by companies reliant on consumer spending after the authorities pledged to increase household incomes as part of the next economic plan.

"China is shifting from a labor-intensive economic model to more higher-valued industries," said Mark Tan, a Singapore-based portfolio manager at UOB Asset Management Ltd, which oversees about $12 billion. "The five-year plan is a road map to where we can expect higher growth."

The Shanghai Composite Index rose 1.6 percent to 3,000.85 on Tuesday, the first time it closed above 3,000 since April 21.

The CSI 300 Index added 2.1 percent to 3,375.67 on Tuesday.

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A gauge of technology stocks jumped 4.7 percent, while consumer discretionary stocks rose 4.1 percent, the two biggest gains among the 10 industry groups in the CSI 300.

A gauge of consumer discretionary stocks surged 4.1 percent - the second-steepest gain among the groups in the CSI 300.

Mainland consumer-related companies will benefit most from the next plan, Jing Ulrich, JPMorgan Chase & Co chairwoman of equities and commodities, said in September.

Cash is pouring into the mainland to profit from economic growth which has averaged more than 10 percent for the past five years, and faster yuan gains following the end in June of a two-year peg.

Hang Seng gains

Hong Kong's Hang Seng Index of stocks rose as commodity producers gained on higher oil and metal prices, and as CITIC Pacific Ltd jumped after its rating was raised by Citigroup Inc.

The Hang Seng Index rose 1.3 percent to 23763.73 at the close on Tuesday, with almost eight stocks advancing for every one that fell on the 45-member gauge. The Hang Seng China Enterprises Index of H shares of mainland companies gained 1.1 percent to 13,573.60 on Tuesday.

"The market sentiment is pretty positive," said Steve Tse, a Hong Kong-based research manager at BEA Union Investment Management. The market retreated on Monday, but the "positive momentum hasn't finished", he said.

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