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China Daily Website

China’s stocks rebound from biggest decline in six months

Updated: 2012-06-05 13:17
( Agencies)

China’s stocks rebounded from the biggest drop in six months on speculation the government will accelerate measures to spur consumer spending to offset a slowdown in the world’s second-biggest economy, Bloomberg reported Tuesday.

Qingdao Haier Co led gains for household appliance makers after the finance ministry said China will offer subsidies for the purchase of energy-saving refrigerators and washing machines. China Vanke Co rose for the first time in four days after May sales jumped 44 percent from the previous month.

“The government is taking a lot of measures to boost the economy,” said Zhang Gang, a strategist at Central China Securities Holdings Co in Shanghai. “The European crisis is a drag but they are more concerned that China doesn’t weaken further. There will be more action and less talk in their bid to stimulate demand. This will boost the market."

The Shanghai Composite Index (SHCOMP) gained 9.3 points, or 0.4 percent, to 2,317.86 at 9:38 am local time, with 30-day volatility at 15.71, the highest in three weeks. The measure slid 2.7 percent yesterday, with 9 billion shares changing hands, 13 percent higher than the daily average this year. The CSI 300 Index (SHSZ300) added 0.3 percent to 2,565.64 today. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded US-listed Chinese companies fell 0.6 percent at the close in New York.

The Shanghai gauge has climbed 5 percent this year on optimism the government will ease monetary policy and increase fiscal spending to counter an economic slowdown. Stocks in the measure are valued at 10 times estimated earnings, compared with a record low of 8.9 times on Jan 6, according to weekly data compiled by Bloomberg.

China will offer subsidies of as much as 400 yuan ($63) for the purchase of energy-saving water heaters, refrigerators and washing machines, the Ministry of Finance said in a statement yesterday.

The plan will use “explicit fiscal subsidies” to promote the use of such appliances, allowing consumers to claim those rebates directly from qualified sellers from June 1 this year to the end of May 2013, according to the statement posted on the ministry’s website.