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Investors see new stimulus, lift stocks by 1.3%

08-16-2011 11:30 BJT

SHANGHAI - Stocks on the Chinese mainland rose on Monday, driving the benchmark index to its biggest gain in a month, on speculation the government will introduce measures to boost economic growth after new lending dropped and money supply growth slowed.

Huaxia Bank Co jumped the most in 10 months after Samsung Securities Co Ltd said China might ease lending to small companies and rural areas.

Ping An Insurance (Group) Co climbed 3.2 percent after rival PICC Property and Casualty Co's first-half profit almost doubled.

Haitong Food Group Co led solar stocks higher as Shenyin & Wanguo Securities Co said the industry will grow "rapidly" after the nation set benchmark prices for solar power.

"With some data indicating a slowdown, policies may be fine-tuned in the second half to allow faster growth," said Dai Ming, fund manager at Shanghai Kingsun Investment Management & Consulting Co. "This will be positive for stocks."

The Shanghai Composite Index climbed 1.3 percent to 2626.77, its biggest gain since July 13.

It dropped 1.3 percent last week, a fourth week of declines, amid concern that debt crises in Europe and the US will hurt global economic growth.

The CSI 300 Index rose 1.5 percent to 2917.88.

The Shanghai Composite has slid 6.5 percent this year as the central bank raised interest rates five times and ordered lenders to set aside more cash as deposit reserves 12 times since the start of 2010 to contain inflation that quickened to the fastest pace in three years last month.

The gauge is valued at 12 times estimated earnings, compared with a record low of 11.9 times for the multiple set in January 2006.

A measure of 52 financial stocks climbed 2.4 percent, the most among the CSI 300's 10 industry groups. Huaxia Bank, partly owned by Deutsche Bank AG, surged 6.5 percent to 10.65 yuan ($1.58), the biggest gain since Oct 15.

Shanghai Pudong Development Bank Co, the Chinese partner of Citigroup Inc, rose 3.8 percent to 9.37 yuan. Industrial Bank Co, partly owned by a unit of HSBC Holdings PLC, added 3.7 percent to 13.32 yuan. Samsung Securities forecast "selective easing" for Chinese small and medium-sized enterprises and rural lending in the second half after data showed new bank loans, money supply growth and system deposits trailed estimates.

New lending was 492.6 billion yuan last month, the People's Bank of China said on its website on Aug 12 after the market closed. That is compared with the 550 billion yuan median estimate in a Bloomberg News survey of 21 economists and 633.9 billion yuan in June. M2, the broadest measure of money supply, rose 14.7 percent after a 15.9 percent gain in June, according to the central bank.

 

Editor:Yang Jie |Source: China Daily

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