Business / Markets

Shanghai index jumps 3% on SOE reform

By Dai Tian ( Updated: 2015-04-27 16:05

Shanghai index jumps 3% on SOE reform

Investor smile in a brokerage in Zhejiang, Hangzhou province, on April 27, 2015. [Photo/IC]

Chinese stocks rallied on Monday, with benchmark index surging to a seven-year high, amid market expectation that reform of State-owned enterprises will accelerate and the government will step up to support economic growth.

The benchmark Shanghai Composite Index jumped 3 percent to 4,527.4 points, marking its highest since February 2008, while Shenzhen Component Index closed at 14,809.42 points, up 1.4 percent.

SOE stocks led the gain, as PetroChina, China Petroleum & Chemical Corp, Power Construction Corp of China, China Spacesat Co, Air China and China Ocean Shipping Group (COSCO) all surged by the daily limit of 10 percent on speculation that the government would consider mergers.

State-owned Assets Supervision and Administration Commission (SASAC) plans to push up reforms and reduce the number of SOEs to 40 through mergers and acquisitions, reported the Economic Information Daily on Monday, citing a source.

Currently, the central government directly administers 112 SOEs, among which 227 unit companies are listed on the A-share market, with a total market capitalization of 10 trillion yuan ($1.61 trillion).

According to the newspaper, the SASAC has issued documents concerning central SOEs rearrangement, and the new round of consolidation will focus on commercial SOEs, especially those in the fully competitive industries.

Oil and gas sectors rallied over industrial reform, as regional companies Shanghai Petrochemical and Shandong Marine Chemicals jumped 10 percent and 6.8 percent respectively.

Electricity stocks remained bullish after the authorities announced that it had reduced both the on-grid power tariff of coal-fired power generation and the tariff paid by industrial end users. Shanghai Power, Jilin Power and Yunnan Wenshan Electric Power soared by the daily limit.

Banking sector gained with Beijing Bank, China Merchants Bank and Ningbo Bank adding 8.1, 4.2 and 4.1 percent respectively.

The CSI 300 advanced 2.2 percent to close at 4,807.59 points on Monday.

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