Hopes of policy supportpush up mainland stocks
Stocks in Shanghai and Hong Kong rose yesterday on investor hopes that Beijing may soon issue stimulus measures to support the mainland's economic growth.
Speculation about new market support intensified yesterday, with traders and analysts expecting Premier Wen Jiabao may announce some policies to encourage more investment and boost domestic consumption.
The State Council, China's cabinet, will have its regular internal meeting this week to discuss the economic situation. The Shanghai benchmark index gained 0.7 per cent, its biggest gain since July 6, while Hong Kong's Hang Seng China Enterprises Index, which tracks mainland companies listed in the city, jumped 2.1 per cent.
Analysts expect Beijing may have to cut the banks' reserve ratio further to help improve liquidity.
'Almost everybody in the market hopes the government can give some good signals about easing its macroeconomic control further, but there are still many conservative investors who have decided to stand by rather than jump into the market right now,' said a trader at Shenyin Wanguo Securities. 'That's why you see that although the index is up, the trading volume is still so-so.'
Sany Heavy Industry, China's biggest machinery maker, has postponed a US$2 billion share sale in Hong Kong after struggling to attract investors, two people with knowledge of the matter told Bloomberg. The company, which had planned to launch the shares this month, may now do it next year.
Well-capitalised Chinese insurance companies and property developers saw gains yesterday as investors sought blue-chip stocks over small and medium companies that are still under selling pressure amid snowballing accounting problems.
Hong Kong-listed shares of Ping An Insurance rose 2.6 per cent to close at HK$63.50. Ping An's Shanghai-listed shares soared 3.7 per cent to 45.94 yuan.
The China Insurance Regulatory Commission may issue new rules to loosen restrictions on insurers' investment in debt securities, share rights and fixed assets, the official China Securities Journal reported. Some analysts also expect the regulator may issue rules to support insurers' efforts to extend their traditional life and health insurance business.
In Shanghai, some investors are banking on more yuan-denominated exchange-traded funds that will raise money from Hong Kong investors betting on the mainland stock market.
Hong Kong's Securities and Futures Commission is in the process of approving three more yuandenominated exchange-traded funds (ETFs) that will allow Hong Kong investors to bet on mainland stocks. Just two weeks ago, it approved the first yuan ETF, a five billion yuan (HK$6.07 billion) fund issued by China Asset Management.
Property stocks gained as local media suggested prices in many major mainland cities may rebound due to strong demand. Monetary policy easing could also boost investment in the property sector.