Bloomberg News

China’s Stocks Rise on Speculation Government Will Boost Growth

June 26, 2012

China’s stocks rose for the first time in six days on speculation the government will ease monetary policy and increase fiscal spending to prevent the economy from slowing any further.

The benchmark Shanghai Composite Index advanced 0.1 percent to 2,225.10 at 9:51 a.m. local time, with three stocks gaining for every one dropping. The CSI 300 Index added 0.3 percent to 2,461.03, led by technology and health-care stocks. Daiwa Securities Group Inc., Japan’s second-largest brokerage, lowered its growth forecast for China, becoming the third brokerage in as many days to do so.

“You’re going to see more monetary as well as fiscal easing,” said Joseph Tanious, who helps oversee $394 billion as a market strategist at JPMorgan Funds in New York. “There’s reason to be cautiously optimistic that growth will pick up in the back half of this year, which should translate into higher stock prices.”

China may introduce “more proactive” policies to ensure stable growth, the China Securities Journal said in a commentary published on the front page of the newspaper today. Policies to stabilize foreign trade, expand infrastructure investment, fine- tune monetary policies and structurally reduce taxes may be introduced, according to the commentary.

The People’s Bank of China may cut the reserve-requirement ratio next month as funds are expected to remain tight even after the 95 billion yuan ($14.9 billion) of reverse repos by the central bank yesterday, the Shanghai Securities News reported on its front page today. The ratio has been lowered three times since November.

To contact the editor responsible for this story: Allen Wan at awan3@bloomberg.net


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