Stocks are boosted by commodities

SHANGHAI - Stocks on the Chinese mainland rose, extending the benchmark index's gain to a fourth day, as inflation concerns and the Egyptian crisis boosted commodity prices, while water shares jumped on the prospect of increased government investment.

Jiangxi Copper Co surged 1.61 percent after the company said 2010 profit probably doubled. Anhui Water Resources Development Co jumped to a record as the State Council said China aims to boost investment in water conservation. China Vanke Co and Poly Real Estate Group Co slid after China Central Television (CCTV) reported Shanghai may expand a property tax to existing homeowners.

"As the property sector gets hammered, other industries such as water resources may see buying opportunities," said Tu Jun, a strategist at Shanghai Securities Co. "Crises in countries like Egypt may have a limited impact on emerging stock markets, but it's not a major concern for Chinese investors."

The Shanghai Composite Index added 1.38 percent to 2790.69 on Monday. The CSI 300 Index gained 1.31 percent to 3076.51, led by commodity and consumer staples stocks.

Jiangxi Copper gained 1.61 percent to 39.17 yuan ($5.93). The company's 2010 profit will likely increase between 90 percent and 110 percent on rising product prices, it said.

Copper climbed in London on Monday, set for a seventh monthly gain, on speculation that demand in China will pick up after the lunar new year holiday and as investors sought a hedge against accelerating consumer prices.

The mainland stock valuations have tumbled to a record low compared with Hong Kong, a sign to investors that mainland equities are poised to rally even as the government cracks down on rising consumer prices.

The MSCI China Index's 9.2 percent slump since November has left it trading at 11.7 times estimated profit for 2011, data compiled by Bloomberg show.

PetroChina rose 1.24 percent to 11.42 yuan, while China Petroleum and Chemical Corp gained 2.97 percent to 9 yuan.

Anhui Water Resources surged 10 percent to 20.86 yuan, the highest since its listing in April 2003. China Gezhouba Group Co jumped 10 percent to 15.71 yuan. The country will also "reasonably" adjust water prices for urban households and "gradually" shift to progressive pricing for retail water, the State Council said, Xinhua News Agency reported.

China Vanke lost 0.73 percent to 8.2 yuan. Poly Real Estate declined 0.99 percent to 12.95 yuan.

Shanghai may expand a property tax trial to existing homeowners from new home buyers at the moment, CCTV reported on Sunday, citing Zhang Hongming, a researcher with the Shanghai Academy of Social Sciences.

Bloomberg News

(China Daily 02/01/2011 page17)