 Stocks surge over 3% on stimulus hopes
(China Daily)
Updated: 2008-11-14 08:07  China's stock market surged yesterday, far outperforming weak overseas markets, because of hopes for a major boost to the economy from fiscal spending and monetary easing. The Shanghai Composite Index ended up 3.68 percent at a three-week closing high of 1,927.613 points, off the day's high of 1942.897. It shrugged off a more than 5 percent tumble by Hong Kong's Hang Seng Index, which was hit by concern over the global financial crisis and economic slowdown. Turnover in Shanghai A shares ballooned to 77.9 billion yuan, a six-week high, from Wednesday's 40.9 billion. Gaining Shanghai stocks outnumbered losers by 919 to 14, with more than 60 Shanghai A shares up their 10 percent daily limits. Details of China's economic stimulus package, which envisages spending of some 4 trillion yuan through 2010, remain unclear following the government's announcement of the plan on Sunday. But official business newspapers on Thursday carried a series of reports predicting huge spending in areas such as housing and railway construction. The Shanghai Securities News quoted a vice construction minister as saying he expected 900 billion yuan of spending to build low-cost housing over three years. Construction and machinery shares soared in response to the reports, with China Railway Group and China South Locomotive jumping their 10 percent limits. Rumours of an imminent easing of monetary policy also continued to aid the market, after the yield on the central bank's three-month bills fell much more sharply than expected at an auction. The stock market rose despite poor industrial output data. Annual output growth slowed to 8.2 percent in October, the slackest pace in almost seven years, from 11.4 percent in September and a median forecast of 11.3 percent by 22 economists polled by Reuters. Ben Simpfendorfer, economist at Royal Bank of Scotland, said the data showed gross domestic product growth risked slowing drastically to 5 percent from its 9 percent rate last quarter. "It is too early for optimism...We need to see evidence in the coming months that fiscal easing has gained traction to avoid 5 percent growth from becoming a reality, rather than a risk," he wrote in a report. Agencies  (China Daily 11/14/2008 page15) |
