SHANGHAI - Stocks rose in the Chinese mainland, led by gold producers and consumer companies, as speculation that the US Federal Reserve Board will buy more Treasuries spurred a rally for bullion, and Goldman Sachs Group Inc recommended liquor makers.
Zijin Mining Group Co jumped the most in almost three weeks after bullion prices surged to a record. Kweichow Moutai Co and Wuliangye Yibin Co gained at least 1.6 percent after Goldman Sachs said the two spirits makers have strong pricing power. China Vanke Co advanced to the highest in almost a month after Citigroup Inc said property speculation has been curbed in some major cities.
"The preference for these non-cyclical stocks will carry on for quite a while amid the backdrop of government policy tightening," said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. "Inflation pressure is there and the market is waiting for the next shoe to drop."
The Shanghai Composite Index rose 0.65 percent, to 2875.86 at the 3 pm close on Tuesday, erasing a 1.7 percent loss. The CSI 300 Index added 1.1 percent to 3200.34. Stocks fell earlier after the China Securities Journal reported the "window" for China to increase borrowing costs rates may be this weekend.
The Shanghai gauge has lost 9 percent since reaching an almost seven-month high on Nov 8 on concern that monetary tightening will curb economic growth. The People's Bank of China last month ordered banks to set aside larger reserves for the second time in two weeks after raising interest rates in October, the first increase since 2007. The measure is down 12 percent this year, and is Asia's worst performer.
Zijin Mining jumped 5.11 percent to 8.85 yuan ($1.33) on Tuesday, the most since Nov 18. Zhongjin Gold Corp soared 5.93 percent to 42.54 yuan. Shandong Gold Mining Co gained 5.14 percent to 57.93 yuan. Jiangxi Copper Co rose 2.38 percent to 36.92 yuan on Tuesday. Kweichow Moutai advanced 2.35 percent to 197.56 yuan, while Wuliangye climbed 1.64 percent to 37.80 yuan. Goldman Sachs said Kweichow Moutai and Wuliangye have strong pricing power and low policy risk.
Vanke gained 2 percent to 8.66 yuan on Tuesday.