Chinese shares ended sharply higher yesterday with broad rallies in blue chips like bank and non-ferrous metal stocks, while reports on pending policies to bolster the equipment manufacturing and textile industries steered a burst of cash into the market.
The benchmark Shanghai Composite Index surged 49.13 points, or 2.44 percent, to finish at 2060.81, the highest since Dec 12. And the Shenzhen Component Index rose 2.52 percent to 7266.41 points.
Advanced stocks on the two bourses far outnumbered losers by 1,606 to 88 yesterday, and the active trading also extended the combined turnover to 147.5 billion yuan, up 55.8 percent from the day before.
"The recovery of the key domestic economic figures from the measures of money supply M2 and M1 to the Purchasing Managers' Index indicated the improvement of the fundamentals, despite the magnitude of the growth remaining mild," said Zhang Fan, an analyst with Tebon Securities.
"Figures from other large economies like the United States looked even worse, which have inspired Chinese investors' confidence that the country will recover earlier from the global financial woes," Zhang added.
Banking stocks picked up steam to rise 2.54 percent overall, led by Hua Xia Bank with 6.04 percent gains to end at 8.78 yuan. The Industrial and Commercial Bank of China ended up 1.91 percent to 3.73 yuan.
All non-ferrous metal shares rallied. A statement from Rio Tinto on Monday saying that China's largest aluminum producer Aluminum Corp of China (Chinalco) will inject $15 billion into the company to alleviate Rio's huge debt sent shares of Chinalco to its daily limit of 10.03 percent yesterday.
Good news also appeared from the policy front. A proposal to revive the equipment manufacturing and textile industries has been finalized, and would be sent to the State Council for discussion today, according to Shanghai Securities News, citing an anonymous person close to the matter.
Media reported recently that the central government is proposing another investment plan worth 130 billion yuan to stimulate six areas including the construction of affordable houses and infrastructure, and key projects in health and education, following a newly added 100 billion yuan investment in the fourth quarter of 2008.
Source: China Daily
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