Equities rise from lows on growth optimism
Updated: 2011-11-29 10:14
By Zhang Shidong (China Daily)
SHANGHAI - China's benchmark stock index rose from a one-month low on speculation that the government will take more fiscal measures to support economic growth, overshadowing concern that the it will retain property curbs next year.
Sinohydro Group Ltd led a rally among water-related stocks after the China Securities Journal reported that the central government plans to invest 80 billion yuan ($12.5 billion) annually for water-saving irrigation projects.
Citic Securities Co climbed for the first time in four days after the Shanghai Stock Exchange said it will widen the scope of securities available for margin trading and short selling.
China Vanke Co slid among developers after Vice-Premier Li Keqiang said the government should continue with real-estate restrictions.
"Economic policies will be relaxed, though they will probably be limited," said Wu Kan, a fund manager at Dazhong Insurance Co, which oversees $285 million.
"The global slowdown caused by Europe's debt crisis and decelerating earnings in the fourth quarter will put pressure on the government to ease policies."
The Shanghai Composite Index gained 2.81 points, or 0.1 percent, to 2383.03 at the close. Almost the same number of stocks rose as those that fell.
The CSI 300 Index added 0.1 percent to 2573.32. The Bloomberg China-US 55 Index, the measure of the most-traded US-listed Chinese companies, retreated 0.4 percent in New York on Friday.
The Shanghai Composite slid 1.5 percent last week, a third week of declines, after data showed the country's manufacturing may contract this month by the most since March 2009. The index is valued at 11.3 times estimated earnings, compared with a four-year average of 17.3 times, according to weekly data compiled by Bloomberg. The measure has fallen 15 percent this year after the central bank raised rates three times and lifted the reserve-requirement ratio to curb inflation.
The central government plans to invest at least 80 billion yuan a year over five years to develop water-saving irrigation projects, the China Securities Journal reported, citing an unidentified person from the Ministry of Water Resources.
The nation will likely maintain "active" fiscal policies next year, focusing on "structural" tax deductions, the journal said in a separate report, citing unidentified analysts. China should pay more attention to solving contradictions between the economy and society through fiscal policy, the newspaper reported, citing Jia Kang, head of the Ministry of Finance's research institute for fiscal science.
China is unlikely to loosen its monetary policies as the economy is still growing at more than 9 percent while the inflation rate is at 5.5 percent, according to China International Capital Corp.