China’s Stocks Climb Most Since 2009 on Government Support Hopes
January 30, 2012, 2:38 AM ESTBy Bloomberg News
Jan. 17 (Bloomberg) -- China’s stocks rose, sending the benchmark index up by the most since October 2009, as slowing economic growth boosted expectations for monetary easing and speculation grew the government will support equities.
Jiangxi Copper Co. and Aluminum Corp. of China Ltd. both jumped by the 10 percent daily limit. Citic Securities Co., the nation’s biggest brokerage, surged 6.9 percent after the China Securities Journal said the nation’s local pension funds may start investing in domestic stocks this quarter. Gross domestic product rose 8.9 percent in the fourth quarter from a year earlier, the statistics bureau said in Beijing today.
“There’s speculation the government will ease monetary policies such as cutting the reserve requirement ratio,” said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. “There are also high expectations that more direct measures to support stocks will be unveiled.”
The benchmark Shanghai Composite Index advanced 92.18, or 4.2 percent, to 2,298.38 at the 3 p.m. local-time close. Ten-day volatility on the index rose to the highest level today since November 2010, after the gauge rose or fell by more than 1.3 percent on six of the 10 trading days this year. The CSI 300 Index climbed 4.9 percent to 2,460.60 today.
Economic growth was below 9 percent for the first time since mid-2009, based on previously reported data, and compared with the 8.7 percent median forecast in a Bloomberg News survey of 26 economists. Full-year economic growth slowed to 9.2 percent from 10.4 percent in 2010, today’s report showed.
‘Policy Easing’
Industrial production in December increased 12.8 percent from a year earlier, it said, compared with the median estimate of 12.3 percent in a Bloomberg survey and a 12.4 percent increase in November.
“There’s a bias in China right now for more policy easing,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages $150 billion
A gauge tracking materials producers rose 8.4 percent on the CSI 300, the most among the 10 industry groups and the biggest gain since April 2008. Jiangxi Copper, China’s biggest producer of the metal, climbed 10 percent to 24.87 yuan. Aluminum Corp. of China rallied 10 percent to 7.32 yuan.
China’s National Social Security Fund has won approval to invest 100 billion yuan ($15.8 billion) from local pensions in stocks and bonds, the China Securities Journal reported today.
Stock Investments
The investment will add to about 800 billion yuan of capital currently managed by the pension fund, the newspaper reported, without saying where it got the information. Almost 30 to 40 percent of the new funds provided by an unidentified southern province will probably be invested in stocks, according to the report.
Brokerages rallied. Citic Securities, the nation’s biggest, advanced 6.9 percent to 10.51 yuan. Haitong Securities Co. climbed 6.7 percent to 8.15 yuan.
China’s securities regulator said last week it will “actively” push pension and housing funds to begin investing in capital markets, and encourage long-term investors such as insurers and corporate pension plans to buy more shares
Stocks were also buoyed after Shanghai signaled it would delay its international board. The timing isn’t right to start the board allowing foreign issuers to sell shares in the city, Mayor Han Zheng said yesterday. Shanghai will instead start an over-the-counter exchange soon, he said.
Two-Year Loss
The Shanghai Composite was the worst performer among the world’s 15 biggest markets in the two years through 2011 with a 33 percent drop. The Shanghai index trades at 9.4 times estimated earnings, near the record low of 8.9 times reached on Jan. 6, according to weekly data compiled by Bloomberg.
The China Securities Regulatory Commission gave approval for 14 foreign investors to receive licenses for investing in yuan-denominated stocks and bonds under the Qualified Foreign Institutional Investor scheme, according to a list on the regulator’s website yesterday.
The Shanghai Composite rallied 6.4 percent in the three days through Jan. 10, the most for such a period since October 2010, as Premier Wen Jiabao called for measures to support stocks. Wen said initial public offerings should be reformed and dividend payouts boosted, the Shanghai Securities News reported last week.
The Shanghai Composite fell 3.5 percent in the past four days, paring this year’s gain to 0.3 percent, as speculation waned that the central bank would cut reserve ratios for banks before Lunar New Year holidays next week and after Standard & Poor’s cut the ratings of nine euro-region nations.
Credit Suisse Group AG and Royal Bank of Scotland Group Plc said inflation would hamper the government’s ability to ease monetary policy. China’s inflation may rebound because of rising wages, land costs and “imported” inflationary pressure, Ma Jiantang, head of the National Bureau of Statistics, wrote in a commentary published in Qiushi magazine.
China relaxed lenders’ reserve requirements in December for the first time since 2008 as inflation slowed to a 15-month low and exports gained the least in two years amid Europe’s debt crisis.
--Zhang Shidong. Editors: Richard Frost, Chan Tien Hin
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net
